How to develop an ESG strategy that works
Whether a business has to comply with CSRD or not, developing an ESG strategy is a wise decision. An ESG strategy addresses short and long term risks and opportunities in the business model. An ESG framework helps to navigate the uncertainties of the 21st century and supports informed decision making.
Step 1 - Determining ESG Ambition
Developing an ESG strategy starts with ambition. Ambition follows the willingness of the board and the main shareholders.
Strong leaders have their antennas out in the world and listen in on the macro and meso waves the world shares. Awareness and understanding of the larger business environment is essential to determine ambitions. This way business leadership can express their wishes to follow, challenge or lead in the dwindling arena of the 21st century.
Step 2 - Turning ambition into vision
To turn ESG ambition into vision has two important aspects:
- the depth of the dive and
- the reach of the vision
The dive is the easy part. The ESG business framework provides an easy to handle mirror on the E, the S and the G. There are some questions to explore and find answers for. At the end of the dive a business is able to compare itself to an ESG benchmark and understand material risks and opportunities.
Mission Guide offers an ESG Maturity assessment to guide the deep dive
The tricky part is in the reach of the far view. To oversee the material risks and opportunities for the business and to understand the available pathways to make the business strong and sustainable, is more of a challenge.
E5 and S1 as guiding principles
To deal with this challenge Mission Guide has added another layer of depth to the ESG framework: solutions. Here we combine the powers of business value creation with extensive knowledge of the circular economy and capacity development.
Laying out a vision to make the business future proof is indeed about avoiding and mitigating risks, but moreover it is about seizing opportunity and leveraging solutions. The circular economy deals with long term value creation by addressing the use of energy and (raw) materials in the business model. While doing that circular economy practices also lower negative impacts on E1 - E4.
The ESG business strategy framework
On the S level the workforce (S1) is the most important asset. Attracting the right people for the right job on the right moment is always a challenge that can make or brake a companies success. A vision on capacity and its capabilities lies at the heart of an ESG strategy. The extra catch is that attracting talent becomes easier with a well established vision on E5 and S1.
Step 3 - From vision to mission
At this point the vision has been tied to the ESG strategy framework. Thorough groundwork on E,S and G has been followed up with a solutions analysis based on the guiding principles E5 and S1. To turn the vision into a mission with tangible transformation programs, three more steps are needed.
- reiterate on the ambition and get board support
- analyse organisational patterns to determine transformation potential
- perform a SWOT analysis on the ESG benchmark combined with the transformation potential
The 3 steps are required before on boarding on the Mission Guide ESG platform is possible
These three steps make it possible to underpin the available pathways with realistic perspectives and create the narratives for ESG transformation. One of those realistic perspectives is the carrying capacity of the workforce.
Step 4 - ESG Transformation
ESG transformation is a form of reorganisation that pursues a higher ESG maturity than the company currently reflects. It is the process of turning strategy into action and measure performance and progress with one single purpose: make the business stronger and sustainable.
To guide transformation it is important to give attention to the X-curve of transition. You can not just deploy new activities without phasing out old ones. Especially when you realise that keeping colleagues engaged is crucial factor to make transformation work.
Compliance vs strategy
If an organisation has to comply with CSRD it would be a waste of money not to turn compliance data into a business stragegy. The ESRS framework used in CSRD is, when tweaked a little bit, nothing else than a very thorough ESG business strategy framework.
Continue reading: Mission Guide offers ESG Strategy Service with Full or Light CSRD Compliance support.
