What Is an ESG Strategy?
An ESG strategy is a company’s plan to track and improve its environmental, social, and governance performance. The ideal ESG strategy also considers your company’s values, vision, and plans for growth.
ESG Creates Value for Your Company
We know ESG initiatives create value for society at large, but what are the impacts of ESG on your company? Global management consulting firm McKinsey found five ways ESG creates value for your company. Let’s take a look at them.
- Increasing revenue - The fact that 66% of consumers are willing to pay more for sustainable products is one of many ways your company can see increased revenue from prioritizing sustainability. When governing bodies are satisfied with your ESG performance, they are more likely to provide access to perks you might not otherwise have. This access can help you tap into new markets and expand into existing ones.
- Reducing costs - Sustainability initiatives can help you substantially reduce operating costs for raw materials like water or carbon. McKinsey researchers found a significant correlation between resource efficiency and financial performance across various sectors. The companies that did particularly well were the same companies that had invested the most into sustainability.
- Requiring fewer interventions - It should seem obvious, but it’s important to highlight that companies prioritizing ESG compliance require fewer regulatory and legal interventions.
- Boosting employee productivity - Employees want to work for companies that prioritize making the world a better place. Adopting initiatives that promote a positive impact on the planet can increase employee motivation, productivity, and workplace satisfaction throughout your organization.
- Improving investments - ESG-driven decision-making boosts your returns due to the investment in only sustainable and planet-promising opportunities. For example, when you prioritize waste reduction, your company saves money on waste removal. It’s important to note that even though making ESG changes may require a significant upfront investment, not taking action can ultimately be more expensive.
How to Optimize Your ESG Strategy
To optimize your ESG strategy, aligning your goals with business objectives, conducting thorough assessments, integrating ESG considerations into decision-making, engaging stakeholders, and monitoring progress are essential. Following these steps can enhance sustainability, mitigate risks, and create long-term value.
Tips To Optimize Your ESG Strategy
Follow these seven tips below to optimize your ESG strategy:
- Commit to improving ESG initiatives and infusing them with your business strategy.
- Identify the topics you want to focus on, areas you are doing well, and those that need to be improved.
- Set clear goals and KPIs for your ESG performance.
- Select a reporting framework, then determine how you will collect and analyze your data.
- Engage with stakeholders, employees, and shareholders to understand their expectations and concerns.
- Prepare your ESG reports and communicate your performance transparently.
- Monitor and improve your ESG performance through targeted ESG initiatives.
And that’s just the start. Let’s discuss additional ways you can optimize your ESG strategy.
Recommended reading: Emerging Trends in Waste Management
Understand Your Company
To optimize your ESG strategy to the fullest, you need to profoundly understand your company’s values and culture as well as their impact on your employees. Your employees are the backbone of your product development and customer service. They are also the loudest voices for strengthening or dampening your brand reputation. Understanding what motivates your employees is essential since they are the ones who drive your ESG initiatives.
Set Holistic Goals
CEOs who are deeply committed to sustainable change and effectively communicate it to their staff to motivate them to take action lead the most successful sustainable companies. Your sustainability goals must be a reflection of your business goals. They must be integrated across your company and measured through key performance indicators (KPIs). In this way, your employees will be supported and accountable for creating a lasting change. It is only the areas we measure that can be changed.
Get the Company Excited About Your Mission
If you want to create a lasting change, sustainability has to become a part of your company’s mission. Look for employees with an expressed commitment to sustainability who can drive change and lead the implementation of your new sustainability initiatives. Such employees will work to connect the board and other employees to your mission.
Once you’ve achieved buy-in from your employees, keep them motivated and informed across your initiatives to sustain your progress and maintain their engagement. Employees who feel connected to the initiatives will create an environment that facilitates faster change.
Make your progress visible by celebrating your milestones and achievements. Create a visual of your progress so employees can follow the journey and take ownership of your goals. If there are setbacks, communicate those too. Transparency is the name of the game and the only way to refocus to keep moving forward.
Monitor Changing Regulations
The ESG regulation environment is constantly changing. Assign a member of your leadership team to oversee the regulatory changes in your industry. You can also work with an outside team who can monitor the changing regulatory landscape and help you remain compliant. At Keter, we help companies achieve and maintain ESG compliance for their waste and recycling management. Contact us today to learn more about how we can help you.