“I recently had the opportunity to speak at the Southern Region Minority Supplier Development Council -- all about helping businesses set themselves up for growth in a changing retail landscape. My topic? The importance of Environmental, Social, and Governance (ESG) performance. The audience? Small-to-midsize businesses and startups, keenly focused on the essentials that would make or break their early years.
Why should they care about ESG at this stage? Why should any of us care?
For so many reasons!
What used to be a “nice to have” has quickly become a strategic imperative – and not just for the big players. An ESG-focused business is a business focused on purpose, values, and transparency. Today’s consumers demand it. Investors, regulators, and employees want it.
Oh, and did I mention?
It’s the right thing to do!
An ESG strategy that’s aligned with your brand purpose can be powerful. It gives any business the chance to positively impact our society, human rights, and the environment.
At the same time, ESG can create value for your business. Attract a larger customer base. Drive new innovation and revenue streams. Reduce costs and risks. Boost profitability and accelerate growth. Companies that have embraced an ESG strategy are experiencing a competitive advantage and outperforming their peers. But, and this is a big “but,” your ESG initiative must be authentic. Completely aligned with your business purpose. Woven into the fabric of your company. Or it’s just a meaningless, “check-the-box” exercise for everyone.
As we go into planning season, ESG should be an important factor in your decision-making, just as it is for the consumer. Increasingly, ESG considerations are influencing buying behaviors.
In fact, 70% of US consumers say they buy from brands they believe align with their own values; 60% say they’d pay more for a product with sustainable packaging.
And a high percentage say a sustainable lifestyle is important.
I don’t need to tell you that smart marketers are out there riding the wave. Just walk the aisle of any retailer. Or look at the research. A piece that recently came across my desk made it clear that products making ESG-related claims average higher cumulative growth versus those making no such claims.
Not sure where to start?
We caution our clients against overly complex frameworks that can overwhelm, and instead use a simple yet rigorous, strategy-driven approach for fast but significant results. A few tips to help:
Start by conducting a Current State Assessment with consumers, customers, employees, supply chain partners and others to pinpoint areas of your operations and value chain that they see as company strengths and improvement opportunities related to governance, social, and environmental stewardship. How might these areas impact their future behaviors and your company’s long-term success?
Next, what are your competitors doing? Your industry? Conduct benchmarking and market analysis to get a handle on sustainability challenges, opportunities, new ESG-related regulations and reporting standards.
Remember, the key to a successful ESG program is ensuring it’s aligned with your stakeholders’ needs and expectations, while remaining true to your brand and business model.
Don’t go it alone! Enlist the help of partners inside and outside the company, including your vendors and suppliers, to develop your action plan and road map.
Ensure enterprise-wide focus and cross-functional alignment through a cross-functional, senior-level team accountable for delivering on ESG objectives.
As you think about your vision and goals, be realistic. Your customers don’t expect you to be perfect in your quest for better practices. Instead, they’re looking for authentic effort and transparency around your goals. Start with the SMART goals many of us are familiar with from our own goal setting: Specific, Measurable, Achievable, Relevant and Time. Then, define quantitative metrics to stay on track, measure your progress, and communicate back to your stakeholders.
I spent many years in merchandising at Walmart and Dollar General – and we often talked about our business as a balance between art and science. Your company’s approach to ESG should be no different. There are going to be clear data points that show you what needs to be done – but the art behind it is that you know your company, your employees, your brand – and you’ll know what the most authentic thing is you can start with, and also, what your team has the capacity to take on. Be realistic as you think through the framework and your next steps on this journey.
And remember, doing something is better than doing nothing!