Guest Post – Notes From the Field: Inter-Stakeholder Communications, Digital Transformation Keys to ESG Performance Excellence
By: R Mukund, Founder & CEO of Benchmark Digital Partners LLC
Today’s business leaders know that their company’s success depends as much on how it manages its Environmental, Social, and Governance (ESG) risks as it does on its financial performance. Enterprise revenue, operating costs, liabilities, equity, financial risk, and other established dollars and cents indicators no longer tell the whole story.
Investors want their portfolio companies to demonstrate that they’re taking steps to limit not only their contributions to climate change, but their exposures to its adverse effects. Employees and customers prefer to engage and transact with companies that credibly reflect their values. And regulators like the U.S. Securities and Exchange Commission (SEC) are proving determined to compel companies to regularly provide their stakeholders with standardized, decision-useful reports of their sustainability risks, their plans for managing them, and the resulting financial implications.
The declaration, pursuit, and proven achievement of bold enterprise ESG performance goals is no longer a “nice to have.” It’s an imperative.
As the findings from the 2022 Benchmark ESG Survey: Business Leaders’ Impressions of Their Enterprise ESG Programs suggest, this much is not lost on US-based business leaders. Among more than 500 respondents representing both privately owned and publicly traded companies across a range of industries, 97% reported that their companies have either already implemented an enterprise ESG program or are in the process of doing so.
The trouble, though, is that the respondents to this latest Benchmark-commissioned survey, conducted by ClearPath Strategies, gave reason to believe that they are developing, implementing, and operationalizing their enterprise ESG programs to serve near-term, even short-sighted objectives.
By the same token, their ESG data collection, performance measurement, and reporting processes may fail to yield either the extent or quality of insights needed to drive continuous, financially expedient ESG performance outcomes and, instead, are incurring unnecessary risks and opportunity costs.
But, as detailed in a new Benchmark analysis of these survey findings, there are two keys to cultivating the lucrative, durable, and otherwise self-sustaining advantages of an enterprise ESG program: improved inter-stakeholder communications and more efficient and actionable enterprise ESG data management and reporting processes. The path toward securing both runs through digital transformation.
Benchmark’s analysis considers the discrepancies in the responses given across two pairs of subgroups in the survey sample.
The first of these subgroup pairs relates to enterprise role, namely the differences in responses between survey-takers who self-identified as “Vice President or above” and those that self-identified as below a VP level. Specifically, the survey findings reveal what may be a lack of communication and consensus among these two demographics over multiple aspects of enterprise ESG programs.
To preview, there’s evidence of a positive correlation between respondents’ role and their confidence in both the strength of their ESG data collection and performance measurement efforts, as well as their organizations’ capacities to achieve compliance with the SEC’s proposed climate risk disclosure rule. The higher the role, the greater the confidence.
As detailed in Benchmark’s analysis, a failure to act in unison toward agreed sustainability outcomes risks misallocation of time and resources in the pursuit of ESG performance excellence.
The second of subgroup pair studied by Benchmark concerns survey respondents who reported using ESG data management and reporting systems developed in-house, and those who reported using a system that originates from an external provider.
Among the more timely findings is that respondents who reported using ESG tools sourced from an external provider reported greater confidence in their organizations’ abilities to measure their operational greenhouse gas emissions and comply with the SEC’s imminent rulemaking. Equally important, though, is how those using an external provider indicated they were not only taking a more balanced, data-driven approach to their ESG programs, but were more satisfied with the functionality of their ESG data management and reporting systems.
For a complete analysis of the findings from Benchmark’s latest survey, as well as the instructive takeaways they offer business leaders, download Benchmark’s new eBook—Business Leaders’ Impressions of Their Enterprise ESG Programs—here.
About the author:
R Mukund is Founder & CEO of Benchmark Digital Partners LLC (renamed from Gensuite LLC on 1-Jan-2021) and a proven organizational leader with nearly 30 years of experience in progressive roles as a technical professional, team leader, Six Sigma Master Black Belt, executive program manager, and most recently, chief executive officer since 2010. He has a track record of distinction in diverse organizations from research & technology, consulting, corporate diversified & global, and cloud-based, tech-enabled services.