Recent shifts in consumer attitude and behaviour, and increasing pressure from investors and employees on transparency across Environmental, Social and Governance (ESG) factors, means it’s more crucial than ever for your business to be proactive in ESG monitoring and reporting.
Those still yet to implement an ESG strategy may point to the perceived costs and a confusing menu of frameworks and regulations involved in implementing a plan and may even fear starting the process because of the time and resources required without having sufficient clarity on the direction of travel within the ESG journey. But the evidence is stacked in favour of companies being more competitive with even a preliminary early stage ESG plan leading eventually towards a strategic sustainability approach. It’s becoming clear that businesses with a forward-looking plans are benefiting from increased operational efficiency and a boost to their bottom line and company valuation.
Keeping stakeholders engaged with ESG
No matter the industry you operate in or your geographical location, your business will no doubt be facing scrutiny over ESG transparency.
Consumers are increasingly seeking out businesses that align to their own moral compass. More and more employees across various sectors want to work for ethically-driven companies. And investors are placing more emphasis on companies that can boost their green credentials and expand their portfolio, with investments in ESG strategies growing 42% from 2018 to 2020. What’s more, 79% of investors now say that ESG risks are an important factor in their investment decision process.
Measuring key ESG performance KPI’s alongsideESG ratings are fast becoming the preferred way for investors to look at suitable business opportunities, with high ratings based on clearly traceable performance metrics seen as safer and more sustainable investments. So monitoring and reporting (with qualified and auditable data) can help you stay ahead of the competition, making your business more attractive to investors and helping them (and you) minimise risk.
Add to this increasing regulatory pressures, various frameworks, and possible fines for noncompliance and greenwashing, it’s clear that knowing how you perform across all areas of ESG is essential for wider stakeholder engagement.
Boosting operational efficiency and financial performance
Sustainability performance has been in the spotlight recently, with COP27 at the end of 2022 calling for more action from companies and governments to act on their promises of reaching net zero by 2050.
With the effects of climate change being felt around the world, the ‘environmental’ element is undeniably important for both people and the planet. But there’s also a heightened focus on social and governance issues too.
This of course impacts the decision making of investors and company directors who see a strong and workable strategy as a way of ensuring long-term success, sustainability, growth and overall business performance. And this is backed by data; a study on the impact of ESG on financial performance by Gunnar Friede et al found that 63% of companies recorded a positive impact on their bottom line when implementing a strategy. A strong proposition was also shown to result in a host of other benefits including an uplift in risk mitigation and higher employee retention.
All of this suggests that when it comes to your company’s valuation, understanding where you are in each pillar of ESG is an essential step in making your business more attractive to investors and ensuring you’re ahead of the competition.
There are so many ways you can use performance data to do this as well as cut costs and drive efficiencies. For example, monitoring the ‘environmental’ elements, such as measuring the impact of more sustainable packaging and the effects of your carbon footprint of your goods, can enable you to reduce costs and become more eco-friendly, in turn appealing to investors and consumers. Tracking ‘social’ factors such as diversity, inclusion, know your employee (KYE) and employee standards can help you attract and retain a happier and more productive workforce. And by understanding your ‘governance’ metrics you can make sure the environment you’re creating is free of corruption and bribery across the entire supply chain.
The more you understand where you are and what you can improve on across each pillar of ESG, the more chance you have of being successful.
Planning for future success
Implementing a successful strategy will take some work, time and an element of resource but the benefits (as touched upon above) are clear to see.
Critical to implementing any successful strategy and mitigating any negative impact on business operations is the choice of data/analytical/risk platforms that can support organisations on their sustainability journey.
Just as having a good ERP system in place can help you define business needs and manage core processes, utilising an intuitive and custom-designed ESG platform, such as Sustainion, can help you focus for the long-term and goes far beyond just looking at profit.
With an intuitive purpose-built platform, the effort and time to collate, analyse and interpret data becomes far less of a strain on your company, allowing you more time to focus on your business and formulate strategies influenced by your data. Using Sustainion, you can focus on a number of key areas including:
- Creating and monitoring performance-based KPIs. From measuring your waste management to your fuel consumption, you can track your performance against real-time targets to see how you’re performing
- Making long-term business decisions that are grounded in real data. Using data you can assess how you’re performing month-by-month and tailor your approach to make sure you’re heading in the right direction
- Creating a framework to work to, keeping you accountable and ensuring you are complying with legislation and avoiding any unnecessary fines
- Learning what your peers are doing and understanding the wider landscape with insights that are designed to give you the competitive advantage
- Managing risk across your entire supply chain, ensuring compliance and using robust data to give investors and stakeholders confidence
Are you looking to drive operational efficiencies and cut costs? Talk to our team today to find out how we can help and book a demo of Sustainion