Sustainability and ESG (environmental social & governance) strategies and plans often seem confusing, complex, and expensive – but they don’t have to be! We would like to repeat the message of our last article - managing environmental and social (E&S) impacts can create value for a business – including retaining and attracting new customers.
The good news is that implementing a good Sustainability strategy can be simple to do with the right tools!
First of all, assess your business’s situation. An assessment of the E&S inputs and outputs of your business will help you identify and then prioritise your areas of E&S risks and opportunities. This provides you with clarity and focus about what you should spend your time and energy on. It also demonstrates to your stakeholders – investors, banks, customers, and staff – that you have analysed, understood, and prioritised the E&S risks and opportunities that are most relevant to your business.
An E&S assessment should be shaped by two questions – “what is important to my business?” and “what is important to my stakeholders?” Your primary focus should be where the answers to these two questions overlap.
Our top tips for conducting your E&S assessment are:
Start broad – your initial assessment, which you can do by completing a simple questionnaire like Triplo ESG’s Free E&S Checklist, should cover a range of different topics that span numerous E&S categories. For example, social issues typically include labour statistics, health and safety, and workers’ rights. While environmental issues would cover matters such as waste management, greenhouse gas emissions, and water consumption. By answering a series of easy-to-understand questions, you will begin to understand where your E&S strengths and weaknesses lie. We provide more information later on the Checklist.
Consider your stakeholders’ views – a lot of companies take into account external and internal stakeholders’ opinions by sending out surveys. Typically, stakeholders – such as customers and employees – will be asked to rate the importance of certain E&S topics. This does not need to be complicated. If you don’t wish to involve stakeholders directly, you can gauge their opinions by reading sectoral guidance or researching the views of activist groups or industry groups. Understanding which issues are most important to your stakeholders will help you in the next step – prioritisation.
You should prioritise – no company can address everything! To help you prioritise, consider the following questions:
Does this issue pose a significant financial, operational or reputational risk? What about inaction – would you lose customers if you didn’t do something?
Does focusing on this issue provide cost-savings, improvements in productivity, access to new customers, strengthen supplier relationships and tendering processes, and/or improve access to finance?
How difficult would it be to address this issue? Think not only in terms of human and financial resources, but also your products, revenue model and operations.
How important is this issue to your stakeholders? Consider both external (customers, suppliers, investors, etc) and internal (employees).
Triplo ESG’s Free E&S Health check provides you with essential information by:
Highlighting the E&S issues that external stakeholders consider most important for your industry
Identifying your E&S risks
Identifying areas for potential value creation
For example, you might discover that you’re performing well on energy consumption. This signifies that your company is taking positive strides towards combating one of the most important environmental issues. You can then publicise this information and use it to attract new eco-conscious customers.
Alternatively, you might discover that you’re performing poorly on waste management. You could work on improving this by using more recycled paper within your business or coming up with innovative ways of recycling the waste your business generates. For example, if you are in the food business you could use a company like ReFood or Biffa to collect your food waste and have it recycled for use as a renewable energy source or a biofertiliser. This can save on your waste disposal costs and also means your food waste is producing something good.
It’s not just about risk, it’s also about opportunity. We cannot say it enough – there are huge value creation benefits associated with ESG initiatives! Whether it be cost savings through improved water efficiency, or improved employee productivity and engagement by creating a better workplace. But above all, you will be doing your bit to meet our present needs without compromising the ability of future generations to meet their own. So, take that first step!
Topics covered in Triplo E&S’s free health check: