Environmental, Social, and Governance (ESG) strategies are no longer optional in today’s business landscape. They are central to building trust, securing long-term growth, and addressing the growing demands of stakeholders. Yet, ESG has also become a point of contention, with accusations of greenwashing and concerns over performative actions undermining genuine efforts. To avoid these pitfalls and build an impactful ESG strategy, companies need a structured approach.
- Decide who will lead the strategy
A clear leader must be designated to drive the company’s ESG efforts. This could be a Chief Sustainability Officer, an existing executive, or a dedicated ESG team. Leadership accountability ensures that ESG remains a priority and is integrated into broader business strategies.
Scott Lane, Founder of Speeki, recommends that the ESG team should be made up of generalists from a diverse range of backgrounds. This is because the topics covered across the full spectrum of ESG are diverse and far-reaching. Rather than having experts in one area, it’s important to have people who understand a broad spectrum of topics and who also have the business acumen to enact change in the company. This is because ESG requires buy-in from the C-suite and the board.
- Identify areas of ESG to focus on
ESG is broad, encompassing everything from carbon emissions and biodiversity to employee welfare and supply chain ethics. Instead of trying to tackle every issue at once, companies should identify areas where they can have the most significant impact – aligned with both business goals and stakeholder priorities.
EY warns companies of ending up with a ‘laundry list’ of popular ESG initiatives. Instead, they must choose areas to focus on that are most relevant and impactful for the company.
Companies should conduct a materiality assessment, which evaluates the ESG issues most relevant to their industry, operations, and stakeholders. This will allow them to focus on areas in which they can deliver measurable results while addressing key risks and opportunities.
- Put together a roadmap
An ESG strategy without a clear roadmap is unlikely to succeed. Develop a plan that outlines specific goals, initiatives, and timelines. Once the focus areas are decided and objectives are determined, companies need to lay out detailed, time-bound and costed plans to deliver those objectives. These should be planned and delivered in the same way financial objectives are.
The roadmap should include:
- Short- and long-term objectives
- Plans for stakeholder engagement
- Plans for embedding ESG considerations into decision-making processes across all departments.
This roadmap should be flexible enough to adapt to new challenges and opportunities but grounded in actionable steps that build momentum.
- Build a collaborative culture
The FT emphasises the importance of breaking down organisational silos and getting leaders of different functions working together to tackle ESG. By setting an example of this from the top, leaders can help foster a culture change that will result in employees at all levels buying into ESG initiatives.
- Invest in tech and external support
Technology and external expertise can significantly enhance your ESG capabilities. From carbon tracking software to supply chain monitoring tools, the right tech investments will enable companies to gather accurate data and streamline reporting.
Additionally, consider partnering with external ESG consultants, advisors and education institutions. They can provide valuable insights, benchmarking, and support in navigating regulatory complexities. External support can also help ensure alignment with global ESG standards, such as the UN Sustainable Development Goals.
- Develop reporting mechanisms
Transparent, credible reporting is essential for building trust with stakeholders. Develop mechanisms to track, measure, and report ESG performance regularly. Beyond compliance, reporting should tell a story about a company’s ESG journey, highlighting successes, addressing challenges, and committing to continuous improvement.
Concluding remarks
Building an effective ESG strategy is not about perfection from day one but about demonstrating a genuine commitment to progress. By taking these steps and maintaining a focus on measurable impact, companies can position themselves as leaders in the transition to a more sustainable future.
