These Best Practices are Key to Building a Solid ESG Strategy

Each pillar of the ESG framework—environmental, social and governance—plays a vital role in shaping responsible business practices and fostering long-term value.

Parts Make the Whole

Companies are working to cut greenhouse gas emissions through various energy efficiency measures, renewable energy adoption and carbon offsetting while optimising resources and building climate resilience.

Promoting a diverse workforce and inclusive culture fosters innovation and enhances employee satisfaction. Equally, supporting local communities strengthens a company’s reputation and relationships, while prioritising employee health and safety and encouraging professional development boosts productivity.

Strong decision-making is ensured through ethical practices, board accountability and transparency. Upholding high ethical standards builds stakeholder trust, while a diverse, effective board enhances oversight. Transparent communication on business fosters engagement and credibility.

It is important to recognise that the three pillars of ESG are interdependent. An integrated approach ensures that ESG strategies are cohesive, maximising their impact and effectiveness.

Integrated thinking begins with an initial orientation and a holistic approach to governance, which should keep all stakeholders informed about an organisation’s performance. Strong commitment to ESG pillars can mitigate risks and unlock new opportunities for growth and innovation.

A Step-by-Step Approach

Sound ESG strategies are founded on a deep understanding of an organisation’s impact on ESG factors.

This starts with an assessment. Assessing impacts involves weighing both benefits and risks. For example, a lack of employee development may increase turnover and weaken skills, while a strong programme enhances productivity and morale.

Involving all stakeholders ensures that the ESG strategy focuses on real concerns and fosters trust and support for the company’s initiatives.

Next, goals should be ambitious yet achievable and align with the company’s overall mission and values. Setting specific, measurable, achievable, relevant and time-bound goals ensures accountability. These targets help organisations track progress and evaluate their ESG efforts over time.

A long-term vision guides overall strategy and aspirations. For example, a company might aim to become a leader in sustainability within its industry by 2030, influencing its product development, supply chain and operational practices.

Further, integrating ESG considerations by embedding them into various departments and processes ensures that they become a fundamental and integral aspect of the business.

Companies can embed ESG criteria into research and development (R&D), ensuring new products consider environmental and social impacts, such as biodegradable packaging or sustainable sourcing.

Assessing suppliers for ESG risks and opportunities and collaborating with them to establish ethical sourcing standards can also enhance overall ESG performance.

Companies should clearly communicate their sustainability initiatives and progress to stakeholders through annual sustainability reports, social media campaigns and participation in industry forums to foster trust and demonstrate accountability.

Eventually, companies should adopt recognised standards to ensure their ESG data is comparable and reliable, such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD) and the BRSR.

Leadership and Culture

Finally, leaders must champion sustainability and ethical practices, fostering a corporate culture that prioritises ESG considerations.

Executives should demonstrate their commitment to ESG by integrating it into the company’s vision and strategic objectives. This commitment should be communicated throughout the organisation, emphasising that ESG is a shared responsibility.

Engaging employees in ESG through training and involvement fosters a sustainability culture, boosting morale and a sense of purpose.