Ready for the ESG Tsunami?
Not a day goes by without hearing about environmental, social, and corporate governance (ESG) principles. Executives are facing mounting pressure on all sides. Consumers, investors, and governments are raising their expectations and demanding concrete commitments. Companies that ignore this pressure will pay the price and face several challenges in accessing financing, attracting talent, and sustaining growth. Like a steamroller, ESG is a major trend that organizations can no longer ignore.
However, a recent survey shows that businesses are not ready to face this rising tide. The CASACOM Elevate Study, conducted with Leger among 300 organizations of all sizes in various sectors in Quebec and Ontario, reveals that 40% of organizations have no ESG or CSR (corporate social responsibility, which can be considered ESG’s anteroom) strategy. Only 48% of respondents claim to have implemented such a strategy.
Another concern is that half (52%) of businesses integrating ESG/CSR principles don’t publish a report. This indicates an incomprehension of this rigorous and transparent process based on measurement, systematic evaluation, and disclosure.
Moreover, the understanding of the ESG/CSR concept differs greatly from one organization to another. Many companies report practicing ESG/CSR through donations and sponsorships, or by taking a public stand on policies or societal issues.
Companies face barriers to implementing ESG/CSR, including lack of time, lack of clear priorities, and difficulty collecting internal and external data. Lack of expertise within organizations is also an important obstacle.
Taking the Lead
Despite the pitfalls, it is essential to take the lead to position yourself well. Decision-makers who fall behind will live with the consequences of their inaction and the backlash will only be greater. As with any challenge, it is important to think ahead and exercise leadership to avoid having to take action under pressure.
So, where to start? There are three main steps to take: the business must first assess its ESG risks and opportunities in relation to its stakeholders. This audit can be carried out within the organization or, better still, externally, to gain perspective and objectivity. It is then necessary to mitigate the risks or exploit the opportunities identified. Some of these elements must become priorities in the company’s strategic plan. Finally, each of the performance objectives must be closely monitored, measured, and disclosed.
The tone and means of communication surrounding this approach must be chosen with care. ESG is definitely not a marketing campaign! The credibility of the process depends on the ability to involve stakeholders, starting with employees. The last thing a business wants is to be accused of greenwashing and be forced to go back to square one. So, are you ready to take the plunge?
Marie-Josée Gagnon, founding president, CASACOM