The world is experiencing a severe economic and social shock. To achieve a more equitable society where growth is shared, Environmental, Social and Governance (ESG) issues need to be at the top of the agenda for both government and business. Businesses, both large and small, are typically more agile and can make a real and faster difference if they choose now to change the way they impact the world. Whilst containment is the main objective for many small and mid-sized businesses right now, taking the eye off the ESG ball would be a mistake and will impact growth and profitability long term.
According to the GSIA by “2018 Europe, the United States, Canada, Japan, and Australia and New Zealand had a total of $30.7 trillion sustainable investments.” That was up from $22 trillion in 2016. Incredible growth by any measure. The jobs of the future will come from innovation in the Green economy. Businesses need to plan now for investment and commitment to a more sustainable supply chain – depending on the sector, this could include using renewable sources, upgrading infrastructure using modern clean technology, considering green transportation options, reviewing packaging requirements, focusing on reforestation, bio-diversity etc.
Growth in enterprise value and investment in sustainability are not mutually exclusive. Building long-term value will depend on the backing of your customers, your investors and your suppliers. ESG commitment and collaboration will become more critical than ever to drive long-term profitability, and the success of all organisations, public or private.
Key actions to think about now include:
- Re-assess how performance measures can better balance review of ESG and financial objectives. New metrics will help more appropriate focus on issues, whether environmental, social or governance
- Review accountability and embed these responsibilities and values across the organisation, ensuring alignment between different functions
- Get help and advice from the many external organisations who specialise in ESG from different perspectives, to be applied to people, process and technology. These specialists will include sourcing and supply chain, health and safety, infrastructure, IT etc There is a lot of innovation and “know how” out there, so access it. Recommend you check out Lorax Compliance
- Map out where most impact can be made quickly. Build this into the strategy and communicate it internally to the team and externally to your customers, investors and suppliers
- Talk to third party suppliers about their strategy, ESG ambitions and priorities, working together to agree goals and implementation plans.
However you decide to proceed it is worth remembering that consciously making a decision on ESG (even if that is to do nothing just now) is better long term than leaving it to fall down the agenda.
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