The climate crisis is now the biggest long-term threat we as humans face – and businesses have a vital role to play in tackling this. What was once considered sufficient corporate action against climate change is fast becoming inadequate, with net zero carbon targets no longer optional. As key stakeholders, including investors, employees and consumers, increasingly demand more sustainable business practices and ESG transparency, it is crucial that senior leadership makes credible and authentic climate commitments a top priority.
Creating a layer of authenticity
Organisations that claim to be environmentally friendly but lack comprehensive plans to support this risk uproar from key stakeholders, including accusations of greenwashing. Leaders must make commitments authentic to their purpose and their business goals, rather than half-heartedly reacting to the climate crisis and societal pressures. Without this layer of authenticity, negative scrutiny could potentially cause enormous impact on brand reputation.
Successful leaders should set both near and long-term targets for emission reductions and develop a comprehensive roadmap to reach these goals. Companies must take the long-term approach with a strong growth mindset; moving too fast without a clear direction and board and executive management buy-in is setting the business up for failure.
When it comes to ESG governance from senior stakeholders, there is no one-size-fits-all approach. For some businesses, the answer lies in redefining the scope of their existing board bodies. Others decide to create a new board-level steering committee dedicated to overseeing sustainability. Many organisations may look to create a secondary layer of governance, with a committee that governs to day-to-day management of ESG responsibilities.
This committee should be made up of representatives from operations, risk management, human resources, legal and compliance- backed up by concrete metrics for their unit. With both teams working in tandem, they can enable the management and measurement of ESG strategy and performance. For this to prove successful, education is vital: all members must undergo sustainability training to increase their level of awareness.
ESG reporting is a data management and visibility issue. Before a company can report on ESG progress, members of management need to know the current state of play, with enough data for businesses to be able to measure their progress and stay compliant. Unfortunately, ESG data is often unstructured and found across complex supply chains. As a result, integrating and analysing these data sets is resource intensive, limiting access to critical information.
Many organisations have already taken the first step to enabling sustainable reporting by moving technology applications to the cloud. This enables businesses to unify all relevant ESG data that can then be distributed and analysed to meet reporting requirements. Beyond the cloud, there is a wealth of emerging tech for ESG reporting that will transform the space, from AI-driven materiality analysis to tracing payment flows using blockchain.
Moving towards a cultural shift
Employees are an increasingly vocal stakeholder group. With nearly 40% of millennials seeing employer sustainability as a factor in deciding where to work, businesses must move towards cultural change if …….