As more consumers become aware of ESG and its impact on their purchasing decisions, companies increasingly recognise the importance of ESG to their ongoing business.
In this blog post, I will explore some challenges companies face when deploying ESG in their business and a bit about responsibility.
First off, some definitions. Environmental, Social, and Governance (ESG) is a framework used to assess an organisation's business practices, performance and risks on various sustainability and ethical issues:
Environmental issues include topics such as water or air pollution, waste management and the carbon footprint of products
Social issues include topics such as working conditions, labour rights and diversity.
Governance issues include board diversity, bribery and corruption, tax, executive remuneration, shareholders' voting possibilities and internal control.
Deploying ESG across an organisation may be a significant change initiative demanding a shift in the mindset and practices across the entire business. It may impact not only all aspects of business operations but also the whole supply chain, management and leadership practices, corporate culture, consumer behaviour, and practice.
But the stakes are high! According to a February 2023 article from McKinsey and Company, "When consumers are asked if they care about buying environmentally and ethically sustainable products, they overwhelmingly answer yes: in a 2020 McKinsey US consumer sentiment survey, more than 60 per cent of respondents said they'd pay more for a product with sustainable packaging". The article continues with the claim that "A recent study by NielsenIQ found that 78 per cent of US consumers say that a sustainable lifestyle is important to them."
Some of the barriers to the deployment of an ESG-positive business model are:
Lack of Understanding: One of the significant challenges in deploying ESG in a business is a lack of understanding about what it entails. ESG is a complex set of standards that covers a wide range of issues. Many companies may not be aware of the various ESG standards or their importance, making it difficult for them to know where to start.
Data Collection and Reporting: Deploying ESG also involves collecting and reporting data on environmental and social impact, governance practices, and more. Collecting this data can be challenging, particularly for small businesses with limited resources. It can also be difficult to report this data in a way that is accurate, transparent, and meaningful to stakeholders.
Integration with Business Processes: ESG cannot be seen as an add-on or an afterthought in a business. Instead, it must be integrated into every aspect of the business process, from decision-making to daily operations. Achieving this level of integration requires a significant shift in mindset and practices, which can be difficult for some businesses to implement.
Resistance to Change: Resistance to change can also be a significant challenge when deploying ESG in a business. Some employees or stakeholders may resist the changes required to meet ESG standards, either because they do not understand the importance of these changes or because they feel that they will negatively impact the business.
Cost: Deploying ESG can also be costly for businesses, particularly in the short term. Companies may need to invest in new technologies or processes to meet ESG standards, which can be expensive. Additionally, businesses may need to allocate additional resources to data collection and reporting, which can be time-consuming and costly.
OK, but why, you may ask, is a Personal Growth Coach writing a blog about ESG?
Well, I believe this topic of ESG is essential for all of us, not only as residents of this planet and consumers of products but also as employees or employers who carry the responsibility for ES and G, in some form or other.
This responsibility aspect, which I believe we share, leads me to consider one or two of the exercises I encourage my clients to complete as part of the Personal Growth Process.
The first is to construct a Personal Values Hierarchy - a prioritised list of the most important life values that influence your life day to day. Creating such a list allows you to think through what is most important to your life right now and can help you understand your life decisions, including at work and overall.
The second of these is what I call a "Work-life Balance Exercise", where you evaluate your satisfaction with your current work environment across 13 different parameters on a scale of 1-10 to help you understand areas of your current work environment that may cause you personal stress so that you can do something about it. One of the parameters in this exercise is alignment between your values and the company values of your employer, and here I don't necessarily mean the Brand values that consumers see but the actual values you see every day within your corporate environment.
When you feel your values are respected and aligned with the company's values, you are likelier to be engaged and motivated.
Conversely, if you identify mismatches between your own values and those of your employer, you may feel disengaged or unhappy and could consider steps to rectify that situation.
So, to create your own preliminary values hierarchy, consider these questions:
Look to your past - what do you consider the main formative experiences you have had?
Look to the future, your bucket list; what experiences do you want to have before you die?
Look at your life now - what do you most value, and what would you change?
From those lists, take each item and write down the core value that defines that experience or even.?
Take that list and rank the items necessary to your life right now.
If necessary, use the list on this page for inspiration
When you have that list, consider your work environment and look for synergies and conflicts.
Next, for those conflicts, what could you do to improve that situation? Think about concrete outcomes and things you could achieve over the coming weeks.
Finally, What first step could you take to start now, tomorrow or this week?
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