ESG Business Strategy Is the Opportunity Leaders Are Missing
Written by Wayne Elsey, Founder and CEO
Wayne Elsey is the founder and CEO of Elsey Enterprises. Among his independent brands, he is also the founder and CEO of Funds2Orgs.
I’ve been in warehouses watching men and women sort through thousands of gently worn shoes and sneakers. Candidly, it’s hard work, and that’s what drives me to build global companies with environmental and social accountability. Caution is warranted, but the ESG business strategy makes sense, and this is an opportunity for any company to get involved.
The better choice is an ESG business strategy for social responsibility
What I’ve learned in the decades of building businesses is that staying within the lines and in your comfort zone isn’t good business. It may appear like success for a company, but playing it safe isn’t the answer. At a time of political noise and regulatory uncertainty, focusing on purpose-driven business does matter. Your clients will remember what you do now.
Developing an environmental, social, and governance (ESG) business strategy means risk management and value creation. The fact is that companies have repeatedly seen how exposed they are to supply chain, regulatory changes, and resource scarcity. Additionally, social factors indicate the strength of your relationships with your vendors, workers, and customers.
The reality is that ESG goals can’t be an afterthought, and purpose driven business and profit are both equally achievable. But the underpinning of a robust ESG business strategy is to align the following three things:
Sustainability
Risk
Financial reporting
The numbers are not subtle
99% of S&P companies and 94% of Russell 1000 businesses issued sustainability reports. Those were record high numbers. Idealists don’t lead these companies. They answer to institutional investors, customers, and boards. These companies, especially their boards and investors, want proof of performance.
In addition, 41% of the largest corporations in the world have net zero targets across their entire supply chains. So, while the perception may seem to be that very few companies are walking away from sustainability, the fact is that for profit companies are indeed moving forward with clear ESG business strategies in their operations. Why? Because avoiding ESG is a risk.
What it actually looks like to build corporate sustainability for any business
ESG can include profit and purpose driven business and can be built into the operations of a company.
Make ESG business strategy structural: In my social enterprises, we’re focused on the reuse economy. It’s a for profit business approach paired with a purpose driven business, meaning ESG is baked into operations across marketing, finance, and sales.
Align your team around outcomes: The very first place to ensure ESG is part of your operations is to embed it in your company’s culture. The more your team is involved and sees profit and purpose, the more they’ll be motivated. It’s essential that everyone can speak the ESG language of what you do.
Separate the noise from the business of corporate social responsibility: ESG is a lightning rod in some places, but again, companies are still moving forward with ESG business strategy because they have a responsibility to minimize risk. Ensuring business sustainability minimizes risk in a very uncertain time.
Set ESG targets you can actually verify: Finally, commitments without metrics don’t become profit and assets for your company. Therefore, it’s essential to be specific with goals, time bound, and reporting, just as 99% of S&P companies and 94% of Russell 1000 businesses have done.
Think like a company owner: Environmental and social outcomes aren’t add ons, and they’re essential. As a private company, we don’t report earnings, but we discuss performance internally and publicly demonstrate the global impact we make with our partners.
Where most leaders actually get it wrong concerning ESG
When leaders attempt to do ESG, they fail. It’s not because it’s the wrong idea. It isn’t. It happens because they treat it more like a marketing and communications side project than an operational one. What that means is that they state their intentions, hire for the right language, but don’t integrate it across the business.
Doing so is the biggest mistake, and it bears repeating. For ESG to take hold, thereby mitigating sustainability risks and increasing profits with socially minded consumers and B2Bs, it’s essential to remember that, despite the noise, people don’t stray far from their values. In other words, people care about their neighbors and future generations in their families.
When you turn down the volume on the noise, the gap between what purpose driven business can do for any for profit company and when companies show genuine care for their communities, consumers respond in kind. Why? Again, because people live their values, even in a time of immense noise, they continue to live and work by them.
The noise around ESG is temporary, but the underlying forces, including investors, global regulation, supply chains, and workforce values, are very permanent. They don’t reverse with noise. They continue to push forward, and the business leaders who realize this are the ones who will become more profitable and sustainable.
Wayne Elsey, Founder and CEO
Wayne Elsey is the founder and CEO of Elsey Enterprises. Among his independent brands, he is also the founder and CEO of Funds2Orgs. This social enterprise helps nonprofits, schools, churches, civic groups, individuals, and others raise funds while helping to support micro-enterprise (small business) opportunities in developing nations and the environment.
