Guest Post: ESG Becomes Mainstream – With Major Commercial Implications
By: David Picton, Senior Vice President of Sustainability, Alcumus
The first wave of momentum around sustainability hit businesses over a decade ago, but was often treated as an optional area of focus rather than an obligation. However, in recent years, the emphasis and commercial relevance of sustainability have become firmly embedded in strategic decision-making. Organisations across all sectors, public and private, now face a range of pressures internally and externally to improve their performance from an Environmental, Social and Governance (ESG) perspective. Indeed, the most forward-thinking ones are setting a challenging balance of targets and strategies, aiming to change behaviours for commercial benefit.
Sustainability factors have made a rapid transition from the days of ‘lip-service’ and an inconvenient business nuisance to one of credible commitments, deep engagement and essential business practice. However, and despite often clear desires to improve their ESG credentials and become more responsible, organisations can be uncertain on the steps to take to achieve this. Faced with tracking and reporting ESG performance, many are also experiencing challenges around data access and availability, particularly across their supply chains and disparate internal systems.
Programmes of policies, initiatives and targets to operate responsibly, with positive outcomes for society and the economy, with minimal (or zero) environmental impacts, have become the ‘table stake’ for organisations to engage their stakeholders and be competitive. The credibility and impact of those programmes rests fundamentally on data visibility, and the ability to connect remote workers, supply chains and daily operations to ‘one true view’ of risk and operations.
Businesses, local authorities, the non-profit sector and many other organisations recognise that doing well and doing good go hand in hand. Increasingly, they are turning to technology to deliver on that potential, recognising that data visibility is the key to intelligent analysis and timely, accurate decision-making. Information flows which rely on spreadsheets, notebooks, pen and paper are susceptible to gaps, mistakes and inconsistencies – all of which can undermine responsible business.
Firms are also confronted by a lack of standardisation and clarity around reporting standards, as well as the need to balance ESG initiatives with the other business impacts such actions can have. To overcome these hurdles, three-quarters of businesses are planning to increase investment in ESG initiatives, including spending on ESG technologies, in the short term to support tracking and reporting of ESG performance, as well as improve operational sustainability and data collection. Firms will also be targeting data visibility across the supply chain to drive more extensive ESG efforts, and will look to leverage existing tools, such as EHS applications, to support these efforts.
To gain the latest insights into the commercial implications of how ESG is impacting major global organisations, we commissioned independent analyst firm Verdantix to undertake qualitative phone interviews with executives. Respondents were based in either the UK or North America and held senior roles within four key business functions: finance, operations, risk and supply chain. Verdantix probed these respondents about the evolving trends surrounding ESG and sustainability, as well as some of the challenges faced by businesses looking to optimise the potential of a robust ESG approach.
Key findings included the influence of investors, customers and societal stakeholders, alongside the impacts ESG can have on company ethos, business strategies, commercial bid success and profit. Some of the challenges uncovered included supply chain data visibility, information siloes and reporting inconsistencies, with clear trends towards increased investment in ESG technologies. The full report outlines some of the most up-to-date, current views on the relevance and impact of ESG – directly from the perspectives of senior leaders in global organisations. To get access to the findings, download the research report here.
About the author:
David Picton is SVP of ESG and Sustainability at Alcumus. Now working with customers across multiple sectors and specialist organisations, he is a former Chief Sustainability Officer and was an original Board member of the Supply Chain Sustainability School. David also achieved the Queen’s Enterprise Award for Sustainable Development, and presented on the benefits of responsible business to the UN’s Conference on Trade and Development.