Forward-thinking businesses that have come to recognize that their customers, shareholders, and employees care as much about how a company behaves as they do about its profits.
One of the most popular ways for companies to put this sentiment into action is to incorporate an environmental, social, and governance (ESG) framework into their organizational strategy. What is ESG? While the tenets of ESG programs will vary from business to business, the unifying goal of ESG is straightforward: to create long-term value for a company or organization by considering the impact of its activities on a range of stakeholders — from investment firms who have prioritized funding sustainable businesses to potential employees who would prefer to work for a company that shares their values.
As more corporate stakeholders and consumers recognize the need to consider the social and environmental consequences of business decisions, having a well-conceived ESG strategy is becoming a strategic imperative for the global enterprise.
Ignore ESG at Your Peril
The term ESG originated in 2004 with the publication of the UN Global Compact Initiative’s “Who Cares Wins” report. Since then, ESG has grown into a global multi-trillion-dollar effort, and its impact has only broadened as major institutional investors have made it clear they expect the companies they’re invested in to commit to and adhere to established ESG criteria.
According to Gartner, 91% of banks now monitor ESG metrics, as do 24 global credit rating agencies, 71% of fixed-income investors, and more than 90% of insurers. Meanwhile, a Deloitte report forecasts that ESG-mandated assets are on track to represent half of all professionally managed assets globally by 2024.
The consequences of poorly conceived ESG practices can be both far-reaching and long-lasting. These negative effects can come in the form of financial losses, potential legal action, and heightened public backlash. One of the more notable examples of how lackluster ESG policies can impact business operations came when SSGA, the world’s fourth-largest asset manager and a vocal champion of boardroom diversity, voted against the reelection of directors at 400 companies because they failed to take steps to add women to their boards. Through such actions, investment firms that hold a significant stake in a company can sway the outcome of important decisions, causing a disruptive power struggle that can negatively impact a company’s operations.
4 Steps for Driving ESG Initiatives
In today’s climate of heightened concern for the environment, social issues, and overall governance, corporate leaders can no longer afford to sit on the sidelines. Achieving meaningful and lasting change through ESG initiatives requires an active champion who can drive these initiatives forward. Whether you’ve already embarked on your ESG management journey or are just getting started, consider the following four steps as foundational to any successful ESG program:
1. Establish Clear Goals and Targets for ESG
It’s not just about setting a target, but also having an actionable plan in place to achieve it. To be successful with ESG initiatives, the goal should be ambitious yet attainable. Targets should focus on discrete, measurable outcomes such as reducing greenhouse gas emissions or improving energy efficiency by a certain percentage within a set timeframe.
In addition, it’s important to ensure that these targets are in line with international standards and frameworks such as the Global Reporting Initiative (GRI) or United Nations Principles for Responsible Investment (UNPRI), which enable companies to be consistent and transparent in their reporting. Reporting on and effectively monitoring ESG issues can drive value and mitigate potential risks to your operations and bottom line over time.
2. Define and Communicate Roles and Responsibilities
Companies should establish clear lines of responsibility and accountability for ESG initiatives to ensure these programs are fully integrated into business strategy and operations. While ESG initiatives are often led by senior executives who set the overall direction and strategy, it’s essential to engage employees at all levels of the organization and ensure they have access to the training and support they need to contribute to these efforts.
Other key stakeholders might include sustainability managers who develop and implement specific programs and initiatives, communications staff who communicate the company’s ESG efforts to external stakeholders, and finance or accounting professionals who track and report on the company’s progress. Finally, developing an effective communication plan for internal and external stakeholders ensures that everyone involved in the process understands the expectations and timelines associated with each objective.
3. Ensure Partners and Suppliers Meet Established ESG Criteria
Today’s global enterprise is only as strong as its weakest link. The partners and suppliers you choose to do business with can have an adverse impact on your company’s brand and reputation. A recent report from Accenture reveals that half of company leaders surveyed see procurement as a priority vehicle for meeting their ESG management goals.
The study also found that 90% of organizations’ corporate sustainability risks come from their suppliers — which means executives who reevaluate their procurement strategies with a focus on sustainability today will find new opportunities to drive organizational change tomorrow. Consider a more diverse pool of suppliers, especially local ones. This can help limit transport over long distances and lower your carbon footprint while leading to greater corporate social responsibility impact.
4. Prioritize Digital Transformation to Realize Quick Environmental Wins
Digital transformation represents an obvious starting point for addressing the “E” in ESG by focusing on converting manual, paper-bound processes to digitalized and automated workflows. Digitalization can not only greatly reduce the amount of paper a business requires — saving energy and reducing carbon emissions — but also dramatically improve the efficiency of operations.
Casepoint’s Commitment to ESG
Casepoint has long been committed to ESG principles. We pursue these principles both by operating our business responsibly and by developing solutions that can help our customers achieve their own ESG goals.
To address environmental goals, we operate our flagship SaaS-based solution, Casepoint eDiscovery, from a highly efficient data center, and we have made a firm commitment to working with environmentally responsible cloud partners. Using Casepoint for eDiscovery, our clients have also been able to accelerate their digital transformation efforts, reducing their paper use and lowering their carbon footprint.
Casepoint is fully committed to addressing the social aspect of ESG. We’re a minority-owned business that understands the value of diversity, and we’ve worked tirelessly to build a workplace culture that promotes inclusion and equity at all levels of our organization. Casepoint solutions also enable our customers to comply with evolving corporate governance requirements. By having a comprehensive eDiscovery solution in place for identifying, managing, and retaining ESI in a defensible manner, customers can reduce the risk of non-compliance or legal disputes while demonstrating to regulators and stakeholders that they have appropriate controls in place.
Warren Buffet once quipped, “It takes 20 years to build a good reputation but just five minutes to ruin it.” The importance of ESG can’t be overstated. Companies that seize ESG opportunities and improve their ESG performance tend to have a reduced compliance burden, an easier time recruiting and retaining talent, and greater trust in their brand.
To learn more about how Casepoint can help your company achieve its ESG objectives, download our eDiscovery Maturity Model Whitepaper. It will help you prioritize investments that maximize long-term value and innovation.