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How can ESG be successfully embedded in business?

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By Dave Fardoe, Chairman of Accordant Solutions, explains how companies can learn from the key elements of other environmental, social and governance (ESG) strategies to improve their own performance.

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ESG is not a new concept, yet it is one that has rocketed up the agenda in recent years and is now a key factor for many businesses and sectors. In fact, for many it’s no longer simply good PR or a helpful sales tool, for many it’s now a formal requirement to implement and prove your organisation’s ESG credentials.

For many years, companies have worked to deliver a positive impact through schemes supporting staff, charities or communities, for example. This work has come under various headings, such as corporate social responsibility or philanthropy, however, the difference now is that it’s no longer enough to simply do good things – we must also measure and demonstrate the benefits.

Is who is leading the way in ESG?

The good news is that there are some excellent examples to learn from. Facilities management company Mitie has recently released its Social Value Report, which provides evidence to suggest that the business is making strong progress on its ESG strategy and is on track to achieve zero operational emissions by 2025, decades ahead of the Government target for the UK.

The report details some key achievements, including how the business supports its customers to achieve their own sustainability targets, and how spending has been increased with voluntary and charity groups to support local communities.

Large organisations making this much progress not only sets the standard for others, it shows the potential for driving change with the right plans in place, and demonstrates the value in having established measurement tools available to report on such fantastic achievements.

Manchester City Council is another good example. It has developed a clear Social Value Policy that defines what the organisation considers as important areas for delivery so that suppliers, staff, stakeholders, and local businesses can use it to guide their working practices.

This useful document includes key areas such as creating employment opportunities, supporting staff with a Real Living Wage, working towards an ambition of zero emissions, seeking social value commitments as part of procurement processes, and the support of volunteering and charitable-giving programmes in local communities.

There are some clear lessons to take away from these examples. Organisations like Mitie and Manchester City Council been forward thinking in the development and execution of their strategies, which is key to their success.

What are the key elements of a successful ESG strategy?

For many, delivering effective ESG plans can be a challenge because it requires a shift in mindset. It’s not about profits, it’s about positive change, and letting go of our historic need for success to be measured in financial terms isn’t always easy to do. An open mind and a willingness to embrace a new way of working are the determining factors for those organisations making the most impact in terms of ESG.

The open approach to ESG activity is another important factor. It’s key to remember that this is a journey, not a destination, and creating real and sustained value takes time and adjustment. What matters to people today may not be the same in a year’s time, and there is no perfect formula. By collaborating with different groups and communities you can learn what works best and show improvement through reporting your impact, building trust and confidence in your activity.

Too many are tempted by the idea of promoting their ‘green’ credentials without being able to prove them, and with many consumers and businesses using social value as a deciding factor in the buying process, it’s vital to act with integrity.

At Accordant Solutions, we have worked with a housing association to develop and embed social value as a philosophy and a measurable way of working. We initially provided an upgrade to the existing IT system with technology that created a significant annual saving. This money was invested in additional street lighting and CCTV systems in a housing area where crime was an increasing issue. The housing association works in partnership with the police, NHS, social services and community groups and was able to influence a reduction in incidents of street crime, drug dealing and other petty crimes.

Using measurement products bespoke to the organisation, many more tangible positive outcomes could be demonstrated, including a net positive carbon impact, improved standard of living and community engagement for local residents, and fewer interventions required from police and mental health services. These things could seem completely unrelated to the organisation at first glance, and difficult to track or quantify retrospectively, however with custom-built software in place the metrics are easy to follow and report on and show just how far-reaching the effects of an initial positive action can be.

As the focus grows on ESG activity across all industries from both customers and regulators, organisations must be prepared to invest time and effort in developing effective plans or risk getting left behind.

Global Banking & Finance Review


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