ESG Future-Proofing: Paddling Towards the New BAU

17 Apr

Surfer or not, we know that to catch a wave, there’s a lot of paddling and energy involved. I'm a sometimes-surfer, not a particularly good one, but I really love our oceans and have been a ‘coastie’ most of my life. My Dad uses the phrase ‘paddling for the wave’ often, and now having passed it to me, it’s a regular topic of conversation with clients.

As you know, Environmental, Social, and Governance (ESG) considerations have gained significant traction in recent years. The emergence of new legislation, the growing risk of losing customers, and the need to adapt to a new business as usual (BAU) have made it imperative for businesses to start paddling for the ‘ESG wave’. ESG is incredibly important to future-proofing and how companies can prepare themselves for the challenges and opportunities that lie ahead, must be viewed with an opportunistic lens.

Governments worldwide are increasingly implementing new regulations to promote sustainable practices and ensure long-term resilience, and they are coming to Australia. It's essential for businesses to stay ahead of the curve by anticipating and adapting to these changes proactively.

Mitigating the Risk of Losing Customers

With growing public awareness of sustainability issues and the impact of business activities on the environment, consumers are increasingly opting for companies that demonstrate strong ESG performance. A 2021 study by NYU Stern found that 65% of consumers are more likely to purchase from brands that support environmental and social causes. Companies that lag in ESG adoption risk losing customers, market share, and ultimately, their competitive edge.

To mitigate this risk, businesses need to engage with their customers, communicate their ESG efforts, and actively integrate sustainability principles into their operations. By fostering a culture of transparency, businesses can demonstrate their commitment to ESG and cultivate trust with their stakeholders.

Measuring Up for the New BAU

As ESG becomes the new BAU, companies need to develop robust frameworks to measure and report their ESG performance. ESG reporting standards, such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), provide a starting point for companies looking to measure their ESG impact.

However, businesses must also develop tailored key performance indicators (KPIs) that align with their unique sustainability goals and objectives. By establishing clear targets and monitoring their progress, companies can continuously improve their ESG performance, ensuring they remain competitive and resilient in the face of evolving challenges.

ESG future-proofing is no longer a choice but a necessity for businesses to thrive. By staying ahead of upcoming legislation, mitigating the risk of losing customers, and measuring up, companies can successfully ride the ESG wave and contribute to a more sustainable future. The time to start paddling is now.

Today, my laptop stand consists of 2 books, ‘Becoming’ by Michelle Obama and ‘The Responsible Company’ by Chouinard and Stanley. Both fantastic reads.

Key Takeaways:

ESG future-proofing is essential for businesses to stay competitive and resilient in the face of evolving challenges.
Companies must proactively adapt to new legislation, mitigating the risk of fines, reputational damage, and limited access to capital.
Engaging with customers and fostering a culture of transparency is crucial to retaining market share and attracting environmentally conscious consumers.
Developing robust ESG measurement frameworks and tailored KPIs will help businesses continuously improve their ESG performance and contribute to a more sustainable future.