With 84% of organisations developing their environmental, social and governance (ESG) implementation plans, how is your business adapting to this new corporate priority?

22 Jan 2021

2020 brought with it many challenges for the business community – Britain’s ongoing relationship with the EU, a global economic crisis, and of course, Covid-19. This has necessitated a broad-brush rethink on the part of many in positions of corporate power as to how they may attract and retain the talent they need to keep their businesses going or growing.

Then, in September, the Big Four accounting firms – EY, Deloitte, PwC and KPMG – came together with the International Business Council (IBC) to ‘encourage’ its members to adopt a new set of standards on environmental, social and governance (ESG) practices. It was presumably considered that a) many organisations required a ‘push’ to do the right thing, and b) that some measure was required of what the ‘right thing’ should be.

What exactly is ESG?

Environmental, social and governance matters are a coming together of the disparate corporate responsibility measures that have been growing in importance over the last few years.

For well over a decade companies have been wrestling with their impact on the natural world. As the buying public has become more eco-savvy and organisations’ records on environmental nasties have been revealed, big business has been increasingly ‘encouraged’ to take their environmental responsibilities more seriously – from the water used in cotton production and fashion manufacturing to the greenhouse gasses produced by power companies and industry, customers started to vote with their feet and their wallets. 

Social measures relate to the way an organisation prioritises its relationship with its staff and the local community. The care an organisation shows for its staff and how seriously it takes its wider civic responsibilities have been creeping up the priority list when it comes to how talent chooses their next employer and how customers choose their suppliers and purchases. Sponsoring local school events, investing in local projects, lifting up the communities that support the organisation and how a company encourages its staff to take time out to volunteer for worthy causes, all go to develop and mature the impact of a company’s social responsibility measures.

Governance relates to who is in charge and how they manage the organisation, including the diversity of their board and directors, the rules and how they are enforced and interpreted within the organisation, and the rights of individual workers. Governance can involve degrees of fairness and the prioritisation of decision-making, all of which contribute to the environment that is created and the direction the organisation chooses to take on a whole host of matters.

The importance of ESG planning is growing

A recent survey, conducted by insurance company Willis Towers Watson, asked board directors and senior executives within organisations across Asia Pacific, North America, Europe, Africa and the Middle East, for their thoughts and plans on ESG strategies and their role in human resources matters.

What it found was that despite, or even possibly because of, the global pandemic, organisations across the world are looking to place more emphasis on their ESG strategies, often as part of their staff incentive programmes, and are investing greater resources into researching, optimising and actioning these strategies.

Some interesting findings from this survey include:

  1. Around 30% of respondents are looking to raise the prominence of environmental, social and governance measures in their incentive plans in 2021.
  2. 47% of respondents said they will be focusing more of their efforts on listening to what their employees want from their ESG strategies. Involving your workforce in change not only improves buy-in to new concepts and activities, but it improves the impact (in terms of staff involvement and outcomes) of what is likely to be a costly adaptation for the organisation.
  3. Approximately 33% of respondents prioritise their ESG strategy so highly that they have created a new executive role to drive it internally and to gather and share knowledge of it. This will be to develop workforce appreciation of the lengths the organisation is going to in order to do the right thing, to be responsible and to create the best working environment.
  4. Around 55% of respondents place so much importance on this that they are accelerating their ESG priorities and timings. This shows that there is a certain amount of anxiety in the marketplace that this is such an important change that they must not only meet predetermined targets, but they also should not fall behind competitors in doing so for fear that this might impact on the internal and external perception of the organisation.
  5. However, just 48% of respondents have so far incorporated ESG plans into all aspects of their businesses, meaning that there is a long way to go yet.

In a crowded and challenged marketplace it is often the organisations with the greatest focus and clarity of vision that not only will thrive but attract like-minded talent to their ranks. And, the better the talent they attract the better their prospects for the future.  It is not at all surprising, therefore, that greater numbers of organisations are dedicating increasing resources to determining, evaluating and monitoring progress towards their ESG goals.

EY’s global chairman and CEO is reported to have said that the “combined impacts of climate change, Covid-19 and economic inequality contribute to the urgency for businesses to embrace long-term, sustainable value creation and prioritize the needs of people and planet and the creation of broad-based economic prosperity”.

If your organisation is one of the 130 or so global companies in the International Business Council and you wish to prepare for the possibility of a Big Four audit in 2021, you seek to attract and retain the best staff, or you worry about a consumer preference wave generated through greater awareness of the ESG matters, we are here for you.

At Consulting Professionals we have extensive experience in sourcing, selecting and placing skilled individuals with strong, evidenced ESG experience to enhance our client’s preparedness for a future where such corporate responsibilities are in greater demand. In a world where the very best talent can pick and choose their next position, employers are finding that they need to offer more than the traditional measures of role and remuneration. If you wish to gain an edge on your competition then you might wish to consider enhancing your organisation’s ESG priorities, targets and expertise with a call to Consulting Professionals.