Small and medium-sized businesses (SMEs) face confused messages about the current state of environmental, social and governance (ESG) priorities.
Yet, sustainability, social value, company culture and ethics retain a huge impact on reputation and long-term business success. They also contribute to the growth agenda set out by the UK government.
Today, I’m recommending four ways in which you can ensure ESG brings growth and success for your business. But first, let’s look at some of the pressures businesses are facing and the messages they may be receiving.
The heat is on ESG
On the environment, we have heard countless calls, from populist politicians and cash-strapped businesses, to pull back or even abandon net zero ambitions. And they are effective.
The EU considers cutting its green claims directive, making it harder to call out greenwashing.
The UK government proposes a loosening of regulations to pave the way for producing more oil in the North Sea.
The Trump administration sacks thousands of government workers and ‘declares war on science’.
The picture for social value is little better.
US firms are being forced (by government pressure and shareholders) to eliminate diversity, equity and inclusion references on websites and documents.
The work:life balance gains of the pandemic are lost as large firms insist on more, or even total, office-based working.
The most recent Charities Aid Foundation survey into corporate donations reveals a 34% decline over the past decade.
And on governance?
Lobbying for a Better Business Act continues, but is dwarfed by the impact of tariffs, wars and trade deals on global trading. What price good governance when the US presidency turns into a profit-making venture for the incumbent’s family and cronies?
Does it matter?
How do SMEs respond to all these headwinds? The first thing to ask is, “Does ESG matter to my business?”
What we see is a two-pronged response. Many firms who jumped on the ESG bandwagon or felt they needed to be seen supporting their staff have taken the first opportunity to jump off again.
They only ever paid lip service.
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If it matters to you, go for it
Yet, those firms who are truly committed and acted with a genuine sense of purpose have found ways not just to continue but to (hateful phrase) double down on their efforts.
I attended a fascinating discussion on diversity at the Chartered Institute of Public Relations last month. One speaker acknowledged how firms had been forced to delete DEI language, but that behind the scenes their initiatives and positive activities continued. The impact remained even if their reputation took a short term hit, such as J P Morgan which replaced DEI with Diversity, Opportunity and Inclusion (DOI). Words matter, but actions matter more.
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Continue promoting your E, S or G actions where you can
Communication of what you are doing to protect the environment, support social value or your colleagues and run your organisation responsibly brings benefits.
You may put some people off, but:
- ESG draws the best talent to your firm
- DEI policies open up the biggest pool of talent
- Diverse perspectives promote more resilience in a crisis or when seeking fresh opportunities
- As others withdraw, your persistence and proposition create a competitive edge
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Internal communications drives loyalty
Your staff remain your greatest asset (AI notwithstanding!), so strong internal communications and listening is your ally.
Encourage and empower staff to support your ESG initiatives on social media. Respect their wishes and support them and they will repay you.
No one wants to work for a firm who flip flops on what the staff think is important.
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Show strong leadership
CEOs do not need to be aggressive or excessively activist about their firm’s commitments to ESG.
Simply making the case that “this matters to me and the company, so we will stick with it” is often enough to show strong leadership.
People follow strong leaders and so do customers. Particularly when those leaders look beyond the self-serving bottom line of company profits and demonstrate they are serving wider societal interests.
At root, an organisation’s pursuit of any initiative has to answer three questions. ESG is no different.
- Is it essential to our purpose?
- Does it align with the values we believe in?
- Will it bring business growth?
I believe environmental, social and responsible business initiatives do all three. In essence, ESG brings growth when it becomes integral. Pick your project with care, move ahead with confidence and reap the rewards with pride.
Photo by Andrew Neel: https://www.pexels.com/photo/assorted-map-pieces-2859169/