6 Steps Your Company can Take to Improve its ESG Performance

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ESG is a cutting-edge strategy for businesses to demonstrate that they have a good impact on society and the environment, that exceeds legislation.

ESG’s three components are what its name implies: environmental (resource use, pollution), social (internal diversity, community impact), and governance (i.e., the internal systems that the company uses to meet the needs of stakeholders).

These three criteria are divided by the term ESG, yet they are very closely related. Keeping up to date on guidance and legal regulations will help your business see the benefits of an efficient ESG strategy.

Speaking with professionals can assist you through your ESG journey and the next steps you should aim to take.

The benefits of a robust ESG strategy

ESG does not solely benefit society but can also deliver financial remunerations. One way it does this is through growth – building strong relationships with government bodies can open new opportunities and can attract ethical business partners.

It can also improve productivity, by attracting workers who have a passion for sustainability – this increase in motivation means businesses are more likely to retain employees and avoid expending funds on training new employees.

Alongside this, ESG strategies tend to reduce the waste produced by businesses; essentially, this reduces the need to remove waste and resources consumed and subsequently reduces operational costs.

Legally, your business is less at risk when creating a clear ESG strategy, due to minimising the chances of intervention from the government and receiving costly sanctions – the government may even provide support financially if you have an ESG policy in place.

So, let’s dive right into the top 6 steps your company can take to improve its ESG performance.

1. Identify key drivers for your business

You must first begin by determining and identifying the key elements of your company that influence ESG performance. Environmental efforts frequently include issues such as energy use and where this may come from, water use, waste creation, and carbon impact to name a few.

Social activities can include anything from volunteering to giving to different charities. Governance might include a diverse hiring procedure, improved working conditions in your supply chain, and a productive workplace environment for all employees to enjoy.

2. Integrate ESG activities into your business plan

As the negative effects of climate change on the environment become more profound and a greater concern for shareholders and investors – so will their concerns for ESG. Integrating ESG concerns into your mission statement and objectives can help you to demonstrate your commitment to ESG in your company strategy and make this clear to all stakeholders.

Using KPIs can help you to improve your score by comparing the statistics with previous years – this allows you to see if your targets are attainable and whether these need to be adjusted.

3. Set attainable objectives for your business

Set realistic and timely goals that are based on ESG initiatives – you may also choose to use UN-established objectives to help provide direction. While having sizeable and promising goals may seem like a great idea, they can not only be unattainable, but they can also place a huge strain on staff, and underdelivering can damage a company’s reputation.

4. Create a plan of action and implement it

Clearly define and outline each stage of the ESG process then assign different staff members the responsibility for each phase to ensure it gets completed – use their strengths to your advantage and allocate tasks based on who is experienced and confident in each area.

A timeline might be helpful for determining when tasks should be completed by; keep in mind that some may take longer than others. Meetings should be held frequently to ensure that employees remain on track to deliver the goals that are set out – this can help to keep everyone motivated and focused on the task at hand.

5. Regularly assess your ESG scores and ratings

Most investors will take a look at a business’s ESG score frequently in order to make an informed decision, with 65% saying they take a look at these ratings at least once per week.

Companies that have a higher rating typically receive 15% more investment also. This is why it is so crucial to develop your ESG performance each year – working alongside agencies and exploring ways in which you can improve your scores can help find significant opportunities for growth.

6. Communication is Key

Whether you choose to publish your ESG ratings and information in an annual, integrated, or stand-alone sustainability report, the way you report may interchange between a breadth and depth approach.

These are not exclusive to each other, and you may decide to utilise an amalgamation of reporting methods.

Letting others know you are committed to improving your performance and striving to do better is a great way of positively promoting your brand and sustaining a wider dialogue with your investors so share your efforts on news platforms.