4 Actions Companies Should Take To Make ESG Believable

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by Eric Burdon
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As ESG is emerging as a new investment standard, the road to its broad acceptance has been rocky. Governments are working to regulate and set standards in the various quadrants of ESG. At the same time, ESG is combating anti-woke movements in America as well as cracking down on greenwashing.

But the more that progresses, the more problems emerge that can threaten ESG in being good. Indeed, systems are always being tweaked and adjusted and improved all the time. However, beyond greenwashing, there are companies engaging in posturing, giving the air that they care about other issues.

A common example is Norfolk Southern, who not only engaged in greenwashing but have been putting in efforts to stomp out technology requirements to save employees' lives and improve their trains. Another is Microsoft and Campbell who prioritized shareholder interest and prevented employees from diverting their 401(K)’s to more ESG-focused investments.

There is a lot that happens behind the scenes and so companies need to do more than announce strategies and release reports to engage with investors.

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They Need To Implement

The environmental side of ESG is getting a lot of attention as temperatures keep climbing and more extreme weather is on the horizon. Companies have been showing their dedication to sustainability by ultimately issuing reports, presenting data, measuring emissions, and stating goals to cut emissions.

All of these efforts are a step in the right direction, but as we’re seeing, it’s not enough and investors are recognising this too. Basic ESG metrics will help, but sustainability will already need companies to hit carbon-negative rather than carbon neutrality.

Furthermore, climate-positive companies are considered high-profile companies to be looking for. It’s these particular companies that are communicating sustainability, and are looking further at impact metrics they can use to leverage sustainability.

A Bigger Push To Go Public

The IPO market will have a good chance of growing over the rest of this year. That much is clear as investors turn to more sustainability desires that they wouldn’t be able to find with larger and well-established companies. Combined with smaller companies needing larger funding to meet sustainability goals and other ESG initiatives, this is perfect timing.

Companies now have a natural advantage to launch IPOs in order to gain higher capital and deliver strong sustainability and a positive impact on the world. Those in the position to launch IPOs or consider them should see this as a big positive.

Partnering With Nonprofits (And Other Organisations)

It’s understandable that being sustainable is overwhelming in terms of what needs to get done. As a result, companies often find themselves teaming up with nonprofit organisations in order to meet their goals. While this is an effective strategy in showing impact and commitment to sustainability, companies can be doing much more.

Similarly with working with nonprofits, making ESG a more convincing movement can stem from working with other companies. With mergers being standard business practices, this obsession to merge with other companies has resulted in larger but fewer companies.

Historically, competition brings innovation to various industries and so allowing them to grow can create more innovative changes. One way to spur this phenomenon would be to work with other companies across multiple industries.

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Educating And Empowering Employees

Even though ESG is a positive direction to steer any organisation into, the more people that are involved in the process the better it’ll become. Educating customers and employees about ESG and how the company is going to become more ESG-friendly is important for that reason. But when we focus on that messaging, it’s easy to forget the more nuanced aspects of that.

Microsoft and Campbells both decided to not allow employees to choose where to invest their money with regard to retirement plans. Educating employees about the ins and outs of ESG and company goals is great, but allowing every part of the employee experience to be ESG focused is crucial.

This means not just giving them ESG-focused investment plans, but letting them contribute to ESG decision-making and ESG projects.

No Course Is Set In Stone

As with everything else, there is no one ultimately correct path to take. There are several options that can be taken. The core focus is to make ESG more convincing by providing strong cases of positive change in communities and companies alike. Adopting even one of these options to your ESG efforts will likely yield larger results, showing the world that ESG is the way forward.

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