Key Elements of an Effective ESG Strategy
Employees, customers, and investors pay close attention to ESG strategies when deciding to do business or associate with an organization.
An ESG (environmental, social, and corporate governance) strategy is a set of standards a company chooses to follow in order to positively impact their community. The ESG strategy outlines the practices and procedures a company and its board of directors must follow to meet predetermined ESG goals. Read on to learn the key elements to consider when creating an ESG strategy.
What Is an ESG Strategy?
An ESG strategy outlines the steps to follow for a company to meet its ESG objectives. Organizations create them to operate in a way that’s good for profits, people, and the planet. Solid ESG strategies facilitate top-line growth, minimize legal and regulatory risks, reduce costs, improve employee productivity, and optimize capital expenditures.
As the acronym suggests, ESG criteria include environmental, social, and governance factors. Learn more about what’s included in each category.
Environmental: An ESG policy should consider environmental concerns like climate, pollution, animal treatment, energy use, natural resource conservation, and waste management by ensuring projects and operations pose minimal environmental risks. For example, companies can combat climate change by reducing greenhouse gas emissions, complying with environmental regulations, and properly managing toxic waste.
Social: Social impacts come from a company’s relationships with workers, customers, suppliers, and the community. For example, a company may practice social responsibility by purchasing goods from ethical suppliers or paying its workers a fair rate.
Governance: Governance refers to how a business operates to ensure sound and fair decisions are made.
Elements of an ESG Strategy
An effective ESG strategy must do the following:
Consider all members of the organization’s approach to ESG: An effective ESG methodology ensures the needs of all stakeholders are satisfied. Sustainable organizations consider whether they create value for everyone.
Incorporate modern science and data: Effective strategies also make room for scientific and data-oriented decision-making, especially when it comes to environmental policies.
Serve as the single source of truth: The ESG strategy should guide decision-making for everyone in the organization.
Set clear and concrete goals: Lastly, a proper ESG strategy should align with a company’s vision and mission, and include clear, measurable goals.
What Changed for Boards in 2022?
Store, Organize, and Manage Documents with a Board Management Solution
Once you create an ESG strategy, a board portal platform like OnBoard allows you to store it securely in a location accessible to all members. In addition, board management software aids in corporate governance, making boards more effective and board members more accountable.
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About The Author
- Josh Palmer serves as OnBoard's Head of Content. An experienced content creator, his previous roles have spanned numerous industries including B2C and B2B home improvement, healthcare, and software-as-a-service (SaaS). An Indianapolis native and graduate of Indiana University, Palmer currently resides in Fishers, Ind.
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