Over the years, business leaders have been in the spotlight when it comes to environmental, social and governance (ESG) initiatives, demonstrating tangible progress. Despite the growing consumer demand for action and a new set of corporate commitments, many business leaders are still struggling to develop and execute ESG plans and track and measure success.
According to our recent “No Planet B” study, 89% said it’s not enough for businesses to say they are prioritizing ESG, they need to see action and evidence. Additionally, 96% of business leaders say they want to make progress on their sustainability initiatives, while the vast majority (80%) remain frustrated and tired of the lack of progress.business leaders because Rise to the challenge and make more progress, but many don’t know where to start.
I recently connected with Pamela Rucker, a CIO consultant and lecturer in professional development at Harvard and co-author of the No Planet B study, to discuss how business leaders can turn commitment and commitment into action. Here is a summary of our conversation:
Pamela Rucker, CIO consultant and Harvard Professional Development Lecturer, and co-author of the Harvard Business Review … [+]
What are the key first steps in the ESG journey for business leaders?
Pamela: The first step in making progress on ESG goals is for business leaders to take the time to meet regularly. Business leaders should establish an ESG working group that meets quarterly and consists of the most senior leaders from across the organization.
This ‘ESG Suite’ ensures that leaders across the business are accountable and productive in their company’s ESG work. Without representation at the highest level, even with the best intentions, these goals can easily be put on the back burner.
How can business leaders engage their employees?
Pamela: Millennials and Gen Z will vote with their wallets and choose employers based on their values. Companies need to make ESG a core competency of their organization and have a sustainability-driven culture as part of their operating pillars. Some examples of this include:
- Engage employees and clients in real conversations about how ESG affects them personally.
- Engage ESG coaches, advocates and sponsors with employees to align them with company goals.
- Gather employee and client ideas on how to improve ESG strategies.
- Emphasize the importance of ESG in corporate culture; provide internal and external communications that support your company’s commitment to change.
- Provide feedback that you have done what you said you would do.
How should business leaders set achievable goals?
Pamela: Business leaders need to set concrete, measurable and (most importantly) achievable pragmatic goals and benchmarks. Leaders should start by setting achievable goals for the first year to show early results. Some examples of these might include:
- Develop a net-zero carbon emissions target and implementation strategy by the end of the first year.
- Work to reduce Scope 1 emissions under direct company ownership or operational control by 5% by the end of the year.
- Implement “One Big Thing” (an initiative that is very important to your employees) within a year.
- Work towards making your profits more supportive of global change (designate a small portion for an effort to make the world a better place.)
- Develop an effective governance strategy for sustainability and climate risk reporting and disclosure.
Why is having a single, clean source of data critical to making progress on ESG initiatives?
Pamela: 91% of business leaders surveyed indicated that they face significant barriers to implementing sustainability and ESG initiatives. The biggest challenges include obtaining ESG metrics from partners and third parties (35%); lack of data (33%); and time-consuming manual reporting processes (32%).
Without a clean source of data, it is nearly impossible to accurately measure and track progress across an organization and find efficiencies that drive progress.
ESG data originates from many systems in your organization, such as finance, human resources, supply chain, and customer experience applications. With emerging technologies such as embedded artificial intelligence, these systems can become powerful recommendation engines, helping to increase efficiency and reduce waste. Therefore, business leaders should look to invest in solutions that allow them to connect, manage and standardize data across all systems to enhance planning and execution and accurately report progress.
For example, organizations that manage supply chain data on the same platform as their financial data will be able to reduce costs and carbon emissions by finding the most efficient routes and transportation methods. At the same time, these interconnected systems will be able to quickly report GHG Protocol Scope 1, 2 and 3 carbon emissions to show the impact of improved logistics operational efficiency on their ESG targets.
How can technologies such as artificial intelligence help organizations make progress on ESG?
Pamela: Technology can now play an important role in driving ESG efforts. In fact, 93% of business leaders believe artificial intelligence (AI)-based technologies will be better than humans at making sustainability and social policy decisions.
By leveraging artificial intelligence and automation, business leaders can gather all types of ESG data without error, reduce the time to manually extract and analyze these key insights, better manage the complexities of integrating data across global supply chains, and identify key potential risks. Continuously develop insights that can increase their competitive advantage.
This makes it easier for business leaders across all departments to collaborate, track progress, and determine a clear path to achieve set goals.
How can business leaders be more transparent about setting goals and openly sharing major milestones?
Pamela: To mobilize large-scale organizational change, accountability is required. Being transparent about your goals means clearly and openly communicating where your organization is now, where you want to be, and the specific steps you’ve taken to get there. Greater transparency creates a unique sense of accountability and helps bridge the gap between intent and outcomes.
Even if the organization falls short of some goals, business leaders should maintain clarity with stakeholders and customers and use these missed steps to reflect on what needs to change. When important milestones are reached, it should also be shared and celebrated! Acknowledging this achievement will add more momentum to the cause, fuel more enthusiasm, and drive better results.
where progress is made
We all have a role to play in moving our organization’s ESG efforts forward. By building an ESG suite, engaging employees, setting clear goals, having a single source of truth, leveraging advanced technology and increasing transparency, business leaders can truly put ESG first and accelerate progress.