Businesses need to be stable and sustainable in order to fulfill their obligations to investors, customers,
shareholders, employees, and society as a whole, and to do so, ESG principles must be followed. According to PwC
in
2020, more than 90% of institutional investors globally said that ESG metrics play a key role in their investment
decisions. The world's largest investment fund, Black Rock, has decided to exit companies that have not made a
carbon-neutral statement by 2050.
So, let's take a look at how businesses can get on the path to a green economy and sustainable long-term growth.
At the initial stage it is necessary to set priorities. Today, sustainable development goals are not just a call
to
action, all goals are not only formalized, but also calculated and presented in special international ESG ratings.
Given
the increasing importance of the ESG agenda, it becomes critical for businesses to get into one of the reputable
international ESG ratings, as ESG-loyalty now determines investment attractiveness. Therefore, it is necessary to
define
sustainable development goals and priorities corresponding to the business profile, it can be:
- paperless "green office";
- reduction of carbon emissions;
- social programs for employees, or programs to improve working conditions;
- projects for the use of recycled materials;
- initiatives focused on business transparency, diversity, gender equality;
- revision of the corporate governance system;
- programs for digitalization of business processes, etc.
The next step is to identify business risks and opportunities. For many companies, the ESG agenda is about risks.
For
example, the World Bank announced in 2018 that from 2019 it will not finance projects related to oil and gas
development. But following the principles of ESG brings not only risks, but also opens up new business
opportunities -
optimization of production chains, implementation of the technologies, cost savings, etc., which will strengthen
competitiveness, create additional sources of profit and growth, increase business capitalization, as well as
attractiveness in the eyes of customers and investors.
The next step on the road to ESG transformation is to make changes to the company's strategy. ESG transformation
requires taking ESG factors into account when developing long-term strategies. But it is not a question of
covering all
sustainability goals at once. It is necessary to clearly define and articulate what changes need to be made to the
existing strategy and what will be taken into account in the next strategic round.
Then it is necessary to form a profile ESG-structural unit, which will deal with relevant issues. In general, such
a
structural unit may consist of three groups:
- The first group deals with the formation and development of a comprehensive ESG agenda, interaction with
investors,
the public, other stakeholders, analysis and tracking of trends, best practices and experience, as well as various
processes occurring at the international, state, industry level, related to sustainable development issues;
- The second group deals with audit issues - control, collection of information and evaluation of data and
indicators on
ESG issues and related reporting;
- The third group is engaged in issues of motivation - identification of responsible persons, development of KPIs,
objectives, analysis of their performance and management of the remuneration system.
Of course, every business will go through its own unique path of ESG-transformation, everything depends on the
profile
and ambitions, but one issue is clear enough today - we have already moved to the new paradigm of civilization
development and for business ESG-agenda is a fundamental factor of long-term sustainability and profitability.