Many companies set out ambitious goals and claims on social and environmental impact, but few actually manage to create a successful ESG strategy to achieve said goals.
With the rise of sustainability, many companies and organizations have been subject to develop greatly ambitious goals and claims around social and environmental impact. But failure to achieve them completely, or at all, have also left them subject to criticism for greenwashing.
With such deceiving business practices on the rise, it is no surprise that the European Union is on a journey to fight misinformation back and encourage businesses to not only be honest, but to actually develop science and data based sustainable goals and claims.
Guide to avoid greenwashing
Redefining ESG strategies
It is quite common for companies to succumb to the pressure of sustainability and look for ways to look better in terms of their social or environmental impact. Unfortunately, looking better has in many cases replaced actually doing better.
In fact, storytelling has taken a lead role in developing companies’ ESG strategies. This is actually a widely spread practice that can undermine true sustainability efforts. An example of this trend is when companies communicate things such as ‘we are determined to cut our emissions by half by 2027‘ or ‘our products are made with 45% recycled materials‘.
And although these targets and claims mean good, they are merely a reflection of the reputation the company would like to have. But a sustainable reputation is only successful when what we claim matches what we do.
In the following paragraphs we will explore what it means to create an impact and action oriented ESG strategy that puts data, honesty and people at the centre of it all.
6 steps to achieve an impact-based ESG strategy
When we talk about changing the storytelling approach to ESG into an impact-based strategy, it means companies cannot put sustainable narratives before an actual data-based sustainable performance. Here are 6 steps to achieve this:
PURPOSE AND IMPACT
The first step to becoming a sustainable impact driven company is to establish a purpose driven strategy. This is, a company should first define its sole reason of being sustainable and developing an ESG strategy.
But given the fact that the approach taken towards sustainability will most definitely depend on the industry, size or location of the organization, among other things, the next necessary step will be to understand the full impact the company’s products or services have on the environment, society and its own governance.
Materiality assessment are one of the first steps companies tend to go through when approaching sustainability, as it refers to learning what stakeholders find relevant regarding the environment, society and company governance, this is, ESG issues.
A double materiality assessment goes a step beyond and looks at the ESG strategy in two directions: the impact the company has on the world around them, and the impact the world around them has on the company.
Once a deeper understanding of purpose, impact and materiality are in place, is the moment when many companies get stuck and find a vague way out by setting ambitious targets and claims that may not end up being fulfilled.
This is why this step is crucial. Once we have a good materiality assessment it is crucial to start addressing these issues, analyzing the different impact-based solutions that can be taken and prioritizing that which we can actually do.
ESG AT THE CORE OF BUSINESS STRATEGY
Sustainability, as well as ESG should not be a separate element from the overall business strategy and in fact should be at the very core of the organization.
Any and every process and activity the company establishes should take ESG criteria into account and make necessary changes so that sustainability can progressively become part of the business culture and every decision can lead to fulfill broader ESG objectives.
KEEP UP WITH REGULATIONS
A central part of any successful ESG strategy is to properly follow national and international regulations on the matter. With the fast development of reporting requirements and climate-related regulations, keeping up with them is essential for overall business performance.
There are in fact a number of different standards that can actually help companies understand their impact and aim for continuous improvement in the different aspects of their ESG performance.
Sustainability standards guide
SUSTAINABILITY AWARENESS AND EDUCATION
Achieving an impact-based successful ESG or sustainability strategy will be much more difficult and slow if the people around you are not fully aware of both the need to act upon these issues and how the company plans to do so.
Businesses should look for raising sustainability awareness and fostering proper education for all stakeholders; from investors, to suppliers, employees and consumers, people are the key to the success of a company’s ESG performance.
Engage employees in the ESG strategy
Sustainability cannot be a one department or one policy thing, it is only ever effective and productive when we integrate it throughout the company, meaning our sustainability strategy cannot thrive if it is not at the heart of employees’ and other relevant stakeholders’ everyday work and purpose.
How can we take action in order to engage people at every level of the company into the sustainability strategy?
In DoGood we believe that working collectively can help us find that which alone may seem unattainable or unimportant. That is why we think the workplace is the perfect environment to find that collective eagerness to make a difference, both for the sustainability and purpose of the company and a more sustainable way of being for all employees.
Through our technology we help companies establish ESG impact objectives for employees in regards to the sustainability strategy of the company. We are able to activate and track employees’ impact, creating engagement that translates into improved ESG metrics, reputational value and an overall positive impact for the environment and society.