Businesses are paying more attention than ever to ESG (Environmental Social and Governance) and many are becoming increasingly vocal in demonstrating that they are doing ‘the right thing’.
The message firms are receiving is that prioritising ESG, and importantly measuring and showing what they are doing and the positive impact it is having, can give them a competitive edge.
I took part in a recent roundtable debate organised by Lancashire Business View magazine. Attended by invited representatives from across the business community it discussed the rise of ESG.
The debate features in the current issue of the magazine and in it we explored the importance of businesses measuring impact on the environment, their social impact and governance and what getting it right can mean to their organisations.
The North West has a big manufacturing base and big construction businesses which, with better technologies, give us a bigger opportunity to make some easier wins as a region when it comes to sustainability and protecting the environment. Technologies are being advanced at faster and faster rates.
All businesses should look at ESG, and not just from a PR perspective but in terms of business planning and supply chain management. There are also pitfalls in ignoring the subject, particularly within those supply chains.
Many businesses are very cost conscious at the moment, quite naturally, and may see ESG as a secondary issue. However, it is important to stress they are not mutually exclusive.
ESG is a brilliant framework for looking at your risk analysis. It’s not just that you want your employees to be happy or you want to be able to report good green credentials. You want to be aware of what the risks to the business are.
To give an example, if you were heavily reliant on gas and had the foresight to look what was happening eight months ago in Ukraine you might have been thinking ‘let’s take steps now’ and asking what you could do with solar power.
So, it should be part of your risk analysis to develop a strategy which gives you long term competitive advantage.
A lot of small businesses need advice on governance and how to get the message out. It is easier for larger companies to report on this.
If you look at a set of accounts for the biggest companies it will be possibly 200 pages, of which maybe 10 per cent is accounting information and the rest is pretty much a brochure explaining what the company does.
It’s structured in a way defined by legislation but gives that opportunity to expand on ESG issues, explain to shareholders where the values are coming from, there’s plenty of opportunity.
Smaller companies have exemptions and it’s practical that they do because of the cost of producing that brochure, so there is that issue about getting their message out.
We also have to take care, because sometimes what we perceive to be environmentally friendly does nothing more than tick boxes and education is needed, especially for smaller businesses that can’t afford to have offices who just focus on this.