ESG Value - Top 3 Ways ESG Creates Value

TL;DR
  • Employees see ESG initiatives as experiencing “meaning” and living a more fulfilled life.
  • Customers want to know their dollars are being spent on MORE than just a product or service.
  • A great ESG strategy can attract/retain better talent and be a differentiator that can help land more clients, so investors look favorably on great ESG programs.
  • ESG needs to be managed and that starts with goals, strategy and tracking towards the goals. This requires accurate data and a system that can capture, track, calculate and report on data to make sure ESG goals are reached.
The value of environmental, social, and governance (ESG) is more than most people think. Companies that can execute a great ESG strategy are more desirable destinations for prospective employees, can land more customers and are even more valuable in the eyes of investors. Let’s take a deeper look…

ESG Value to Employees

Employees now more than ever are looking for their work to have meaning. That includes feeling like their work is contributing to the overall success of the company or team they are working for, but it doesn’t stop there. Employees see ESG initiatives as experiencing “meaning”. If the company you work for is actively helping to reduce hunger in famine stricken areas, or they are contributing to reducing carbon emissions, or they are supporting local businesses and entrepreneurs or any number of valuable ESG focused initiatives, they are providing employees with a sense of meaning. Every day the work their people contribute is not just for profits but is supporting making this world a better place.

ESG Value to Customers

More and more sales people are being asked what their companies’ policies are around ESG initiatives. Deals are won and lost on a company’s focus or lack of focus on ESG. Personally, I was recently asked by a prospective customer to only provide references that were women or minorities. Having women and minorities as current clients that were willing to personally vouch for our services was a prerequisite for this person to do business with us. I get it. Like it is with employees, customers want to know their dollars are being spent on MORE than just a product or service. There are often dozens of good vendor options so why not work with the one that will provide great service AND support great causes.

ESG Value to Investors

ESG value derives from how investors and other stakeholders use the framework to evaluate a business. Environmental, social, and governmental areas of influence are key for any business to address. Not surprisingly, if a great ESG strategy can attract/retain better talent and be a differentiator that can help land more clients, investors look favorably on great ESG programs. Also not surprisingly, a company that has the time and resources to adequately focus on ESG initiatives, is highly likely to have steady revenue and consistent profits that are attractive to investors. ESG is also a sign that a company is looking to be competitive in the long run. Most ESG initiatives are “long plays” so companies that are investing in longer term ESG strategies tend to place a long term success outlook on their own company. All in all, a company that has great ESG execution is more likely to be successful… especially in the long run.

How to Maximize the Value of ESG

You may be thinking, “Wow, that’s a lot of value from one initiative! How can I get this going ASAP?” Like anything else a business focuses on, ESG needs to be managed and that starts with goals, strategy and tracking towards the goals. For example, let’s say the CEO of your company walks into your next leadership meeting and says, “We have an objective to reduce our waste water output by 50% over the next 5 years… ready, go” So now you have a goal, step one complete. But now you need a strategy to reduce water waste AND a way to track progress to that goal. Both of those steps need data. You need answers to questions like:
  • How much waste water do we currently produce?
  • What areas of our company produce the most waste water?
  • Are there any “quick wins” to reduce our waste water that we can implement with little to no cost?
The only way to start answering questions like these is to have data. And like there are CRM’s to track sales data and accounting software to track financial data, a successful ESG strategy needs an ESG platform. We recommend Intelex. Here is a link to their page if you want to check them out directly: https://www.intelex.com/products/applications/esg-management-software/ The cool part about a tool like Intelex is it can capture, track, calculate and report on just about ANYTHING. There are so many examples of things that can be measured like:
  • Waste water
  • Carbon footprint
  • Headcount
  • Electricity usage
  • Vaccination rate
  • Inbounds from certain countries
  • Almost anything
Having a tool like this also prepares you for future trends. There are always “unknowns” in the future it helps to be prepared for. Intellex can adapt to new trends to quickly capture data, track, calculate and report. This eliminates the need to manually track data in spreadsheets and consistently run pivot tables or macros. Basically, if you are serious about running a successful ESG program, you will need to implement a system like Intelex provides.