Business Case for Environmental, Social & Governance Policies
28 Feb 2019
Delta-Simons Social Sustainability Consultant, Paul Burns, writes for GRESB Insights. GRESB assesses the sustainability performance of real estate and infrastructure portfolios and assets worldwide, offering ESG data, benchmark reports and portfolio analysis tools.
How much time is spent writing policies and business plans which have the sole intention of detailing business growth, self-protection or increasing our market share? How much time is then spent developing relationships, investing in people or understanding customer needs?
They appear to be two diametrically opposed ways of doing business. One is cold and calculating while the other is full of emotion. Would it not seem more of a natural fit if we spoke about our business objectives with the same emotion we spoke of our personal relationships?
What if we could add value by understanding the ‘true value’ of what we do? What is the value of doing the right thing? Can we create a competitive edge because we care passionately about what we do, how we do it and who we do it with?
Creating an Environmental, Social and Governance policy (ESG) not only challenges organisations to define their very purpose, it asks that you show how you will bring that purpose to life, how will people who work for you, with you and the communities you work within experience your authenticity. What will success look like? Once it has stated what you care about, how are you going to allow others to draw inspiration and admiration for what you are doing?
The key to a successful ESG policy will be in allowing others to see the emotional connection your organisation has to the people and communities it interacts with. How often have we heard the expression ‘people do business with people’? With an ESG policy successfully in place, corporate relationships become less reliant on individuals’ relationships.
Why should a company create an ESG Policy?
Knowledge is Power. Knowing about how and where companies operate is becoming increasingly important to the consumer. ESG policies allow businesses to interrogate their suppliers and ensure that they are performing ethically against stated objectives. Brand reputation is so important in any business, an ESG policy creates the story that allows customers and staff to believe in what the company is trying to achieve. It secures your brand reputation through being an authentic and transparent demonstration of your working practices, objectives and ambitions.
A good ESG policy should become a key indicator to the culture of the organisation. It will give key signs to staff how their actions are having a direct impact on the success of the business. Creating a positive culture with a strong social purpose will also impact on staff retention and recruitment. As organisations look to recruit top talent it will create the opportunity for potential candidates to base their decisions on reported social impacts. As a consequence, your recruitment process builds on its desired culture.
How to create an ESG Policy
Fundamental to its development, is the requirement that the organisation has a clear vision of what it wants to achieve:
- The vision must be clearly stated.
- Objectives must be relevant to the vision.
- At some stage in its development, all employees must be involved and be able to see how their contributions are important and play a part in the overall success of its implementation, it cannot be the responsibility of named individuals or departments. The skills and experience of all staff need to be harnessed so that something bespoke and meaningful can be created.
- All ESG policies should be ambitious almost to the point of looking unachievable. This will demand that a detailed plan accompanies the policy which describes how evidence will be gathered and shared and ultimately demonstrates how the ‘ambition’ will be achieved and what success will look like.
ESG is now a multimillion-dollar business. Investors are creating bespoke investment portfolios based on the strength of an organisations ESG policy. The interest in how you chose to do business is influencing investment decisions. Doing the right thing is becoming business critical.
An ESG policy allows business to take responsibility for its actions. It allows an organisation to realize that they have the power to deliver change in so many ways. At the beginning, we set the question: what if we could gain a competitive edge through doing the right thing? What a powerful tool that would be. Wanting to make things better for others while growing a sustainable business. Allowing actions and stories to sell your business in ways no corporate plan could have ever outlined.
The ESG policy should support existing policies and not be a stand alone document, developed or delivered in isolation. It should reflect the history of the organisation and the aspirations of the individuals who work there.
The emotional connections between the organisations and its ESG policy can never be overstated.
This article was written for GRESB Insights. See original article.
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