Establishing the right Environmental, Social, and Governance goals today can help your business stay ahead of the curve.
While privately held companies may not be subject to the same environmental, social, and governance (ESG) standards as publicly traded companies, these three areas are increasingly front of mind among businesses of all sizes and sectors.
“Whereas private companies have been able to be agnostic on many of these issues before, customers and employees are now looking to do business with companies that align with their own values,” explains Chris Nicholson, SVP, ESG Credit Portfolio Manager at Regions Bank. “As a result, companies are finding out that it can benefit the bottom line to make your corporate values clear.”
Numerous studies reflect this fact. According to a 2021 PwC survey, 83% of consumers say that companies should be actively shaping ESG best practices. This number is much higher among younger Americans: a study conducted by Porter Novelli and Cone found that 9 in 10 of Gen Z consumers believe that companies must work to address social and environmental issues. Meanwhile, prioritizing ESG goals may also reap benefits when it comes to talent recruitment and retention: According to the PwC survey, 86% say they would prefer to work for a company whose values align with their own.
Then, of course, there’s the added benefit of staying ahead of the curve.
“Some firms are looking at ESG and are just going to let change happen to them, but some will review their current policies and practices and will look for ways to evolve and innovate,” says Matt Welch, SVP, Senior Corporate and Commercial Credit Portfolio Manager at Regions Bank. “Companies that plan out their approach over the next few years and look for attainable, short-term and long-term goals will be able to use this time to their advantage to refine and sculpt their message.”
Identifying the Right Goals
Whether you’re choosing to prioritize environmental, social, or governance goals, it’s important to remember that authenticity is the key to success. For many companies, a smart place to start is to craft a mission statement. This declaration can serve as a guiding light, helping ensure your goals and decisions are well-aligned with your company’s values.
“It’s really rounding out any two-dimensional goals and mission statements that you may have developed in the past and giving some flesh and muscle to them,” Welch explains.
Ultimately, in order to be truly impactful, your company’s ESG goals should be based on values that are important to your business and your team. Conducting interviews with key stakeholders such as employees, vendors, and clientele can be a highly effective way to identify your particular ESG priorities.
To help turn your commitments into measurable progress, you might also consider identifying a point person to oversee your company’s ESG efforts. Setting up regular check-ins and identifying key metrics can help you evaluate your company’s progress toward its goals.
Finally, remember that accountability is key. Keeping stakeholders up to date on your business’s ESG policies and initiatives can help you stay on track and set a solid foundation for any ESG regulations that may arise in the future.
As the conversation around ESG continues to evolve, it’s important to stay informed while remaining true to your company’s mission. Having clear and measurable ways to mark your progress and communicating your activities to stakeholders are valuable ways to help keep your company on track toward achieving its goals.
To learn more about ESG and what businesses may expect from a legislative standpoint, listen to our full conversation with Chris Nicholson and Matt Welch in Episode 15 of Commercial Insights with Regions Bank: What Your Business Needs to Know About ESG.
