Meeting ESG Head on in 2023: 10 Things to Consider with Flat Budgets and Growing Expectations
As we approach 2023, ESG and sustainability expectations are up, while many corporate budgets are flat from worry of a looming recession. Here are a few questions to ask yourself going into 2023.
Where should you focus your limited time and resources to make the greatest impact?
What are the key trends you need to keep in mind?
First, let’s start with the understanding that social and environmental issues cannot be "solved" with a sustainability report, a PowerPoint strategy or a polished narrative. Real commitments require real strategies and concrete action. Everyone is paying attention - from investors to consumers to regulators - and they are on the lookout for companies making promises without following through on them: also known as “greenwashing.” New regulations are aimed at making companies demonstrate that they have solid plans and data to back up what they say.
Here are a ten suggestions and trends for where you should prioritize your focus in 2023.
Address your most pressing materiality issues first. A quality double materiality assessment should tell you what issues are the most important to your business.
Consider impact vs. feasibility. Once you know what issues are material, you’ll likely have multiple ways to address them. With limited budgets, prioritizing actions that can have the greatest potential impact AND feasibility are critical. For example, one thing we are able to do for our clients is to facilitate an impact vs. feasibility assessment process to arrive at a clear and realistic path forward. Many actions can be implemented in phases or one after the other.
Center ESG processes and strategy at the core of the business. Sometimes, becoming a more sustainable company means large-scale investments. But when c-suite leaders are knowledgeable about sustainability, they can often find ways to incrementally integrate sustainability and responsibility into their business operations without significantly increasing costs. ESG strategy integrated across the business increases efficiency.
Align your operations to comply with unfolding ESG standards. Emerging regulations from the EU, UK, US, and Australia are starting to come into focus, particularly around ESG reporting and transparency in supply chains. Mitigating climate-related risk, building climate-resilient operations and implementing human rights due diligence will all eventually be essential to comply with new regulations. On top of that, companies need to disclose, report and build strategic plans to meet growing expectations from stakeholders and investors.
Think beyond your carbon footprint. There’s been a rush to track and mitigate carbon emissions the past several years (for good reason), but more companies are now taking serious actions to address other sustainability and ESG topics like biodiversity, water, waste, chemicals of concern in products and packaging, and forced labor.
Educate executives on ESG, regulation and policy frameworks. If you are going to ensure ESG is integrated successfully across the business and avoid greenwashing, your leaders and executives will need to be educated about what ESG is, how regulations impact your company, and what your stakeholders will expect you to do.
Proceed with caution when making public commitments. In a rush to keep up with their peers, many companies set large sustainability goals and leverage their PR and marketing firms to help them tell their sustainability stories. But after doing so, many companies realize that actually reaching those goals is more difficult than they had anticipated. Increasing consumer and regulatory scrutiny will encourage companies to set less ambitious, more realistic commitments and green product claims that can be backed with data – before communicating.
Understand your supply chain. Due to corporate globalization and complex outsourcing over the past half century, business leaders have moved farther from understanding their supply chain rather than closer, but the need to understand their sourcing is growing. Knowing where exactly their operations and production have an impact can be accomplished by creating a detailed risk map of their supply chain. As factory disruptions in China continue, national security and domestic labor issues intensify, and the cost of fuel for long transportation routes rise, companies will be forced to diversify, regionalize, and localize their global supply chains.
Use participatory grantmaking approaches. When you include the community - nonprofits, key leaders, your employees and others - in the process of developing your social impact strategies, you will ensure that the people closest to the issues are informing strategy, budgets, and decision-making. Not only will this advance equity, but it will usually yield greater impact right from the beginning.
Establish ESG infrastructure. Most companies do not have mature ESG policies, programs, metrics or accountability mechanisms. As companies shy away from big proclamations and go beyond reporting, the focus will turn inward to drive enterprise change management across business units. This requires:
Collecting and analyzing ESG data in one place
Raising awareness and understanding of relevant ESG issues among leaders
Helping business units figure out how to align sustainable and responsible practices to their work, and
Driving coordinated action, measurement and communication
Recent reports have shown that companies placing a greater level of importance on ESG principles in their business have seen higher revenues, stronger profit growth, and greater access to finance. And while transitions for energy-intensive industries may be understandably more difficult, the benefits are still showing that they far outweigh the costs.
Need help getting started or advancing your social, sustainability, human rights or ESG work? Click here. Uplift’s mission is to help business be its best for people and our planet. We’re a boutique agency combining deep technical ESG expertise with skilled communicators to help companies not only look better, but be better.
The Uplift Agency
Uplift builds strategies, programs, and communication campaigns that advance ESG in workplaces, supply chains and communities.
We know how to navigate the road ahead because we’ve already been down it – 90 percent of our team has led environmental or social programs in corporations or nonprofits. Because ESG is all we do, our services are more comprehensive and integrated than most firms.
