Corporate ESG Strategy 101: Examining the Different Types – ESG is an acronym for Environmental, Social, and Governance. Corporate ESG is the structure that encompasses a company’s performance in all these areas, which are inherently connected.
Consumers and stakeholders are increasingly allocating funds toward support for companies that consistently demonstrate sustainability, increased social responsibility, and a corporate ESG strategy in tangible ways.
The changing corporate landscape is trending humanitarianism, social impact, impact investing, and slowing climate change. Integrating an ESG strategy does more than increase a company’s bottom line, it strengthens the company unit and secures a stake in the future.
Here’s what you need to know about the different types of Corporate ESG strategies.
Table of Contents
Goals and Targets
Any successful corporate ESG strategy will include setting goals and targets for each of the three key areas. It would look something like this:
- Environmental – Reduce carbon footprint by 50 percent in 5 years and to net zero in 10 years.
- Social – Increase diversity by at least 50 percent in management and senior management positions over 24 months.
- Governance – Invest heavily in sustainable energy to cut supply chain costs by 15 percent in 5 years.
Clear goals and targets are necessary for upper management to map out a plan and measure progress toward such goals. It is sometimes necessary to consult with a third party who can help to integrate corporate ESG goals into an actionable plan that can be executed and measured.
Measuring Progress
Transparency helps build trust between a company and consumers. Simply setting goals and integrating a corporate ESG strategy is not enough. Key performance indicators should be used to track and report a company’s progress toward its goals. Progress and results must be effectively communicated to stakeholders and consumers regularly.
Integrating a corporate ESG strategy is about effecting positive change within a company’s landscape and on the world around them. When that change begins to take place, it should be measured and reported for continual improvement.
Stakeholder Engagement
Whether gathering feedback or enhancing a company’s social reputation, stakeholder engagement is crucial to any corporate ESG strategy. Efficient and effective communication builds trust and support while offering valuable feedback which identifies areas of possible improvement. From employees to community organizations, consistent stakeholder engagement improves other key ESG elements while capturing valuable insights crucial for improvement.
Integrating and Investing in ESG
Integrating a corporate ESG strategy means aligning the company’s vision with its mission and its effect on the world. It means investing in corporate and social sustainability and improvement in other areas. Comprehensive training and consulting in multiple areas relevant to the corporate ESG strategy are essential to successful implementation. This may include the aid of advanced technology and invest in employees with the skills necessary to support company objectives in implementing a Corporate ESG strategy.
Implementing a Corporate ESG Strategy
Implementing a corporate ESG strategy is the best way to secure a company’s future. As the landscape trends more heavily toward supporting companies that commit to integrating a corporate ESG strategy into their vision, it becomes more apparent that the future is sustainable. Only the socially responsible will thrive in tomorrow’s corporate world. Impact investing and shareholder activism are shedding light on the fact that sustainability is the future of the corporate world. Corporate profits are irrelevant without the sustainability and social responsibility to enjoy the fruits of our labor.