How to communicate the importance of ESG Metrics to boards and leadership teams

Written by Susan Marx - ESGCloud Team
4 Dec 2020

Amongst the many impacts of the global pandemic, it has certainly been a potent catalyst for more attention to be paid to the needs of all stakeholders and the benefits of making sustainability a common goal.

Whether that is on creating a sustainable workforce, sustainable business model, sustainable supply chain, or on a company’s ethos to include sustainable practices; a viable response towards the uncertainty we face in the 21st century is for boards and leadership teams to work towards.

It is easily said, unfortunately less easily achieved. An essential step towards attaining these goals entails communicating the value of ESG to leadership groups and introducing a common set of goals i.e. metrics. While doing so, it is safe to say that somewhere along the line you will likely encounter resistance and quite possibly confusion about what the term ESG means, beyond being yet more jargon.

One way to cut through the confusion and get leaders and the Board of Directors on the same page is to communicate why ESG matters.

A compelling reason is that it enables companies to attract and retain the best talent from a millennial and next-generation workforce, who place far more importance on a company’s sustainability practices as compared with previous generations. In fact, a study by Fast Company found that a whopping 70% of millennial employees based whether they stayed with a company long term on its ESG record.

The younger workforce aren’t the only ones paying attention – so too are investors. They are concluding that companies with a strong prioritization of ESG are more successful, and thus less risky to invest in.

Those conclusions have factual basis – a NASDAQ study found that companies that are committed to meeting ESG goals are considerably (22%) more capital efficient than their non-ESG counterparts, while being almost half as risky.

With that motivation in place, boards and leaders can be encouraged to focus on some specific metrics to set goals around. The World Economic Forum’s International Business Council (IBC) has identified three particular ones as a terrific starting point – employee retraining, climate change and, diversity and inclusion.

Employee retraining is only set to become more relevant in the months and years to come, with automation impacting on a variety of occupations and industries, necessitating empowering workers to reskill for a changing working world.

Furthermore, the pandemic, social distancing and the need for remote working have only accelerated the adoption of automation and digital transformation, and thus the need for employee retraining.

The relevance of climate change is self-explanatory, increasingly affecting everyone, everywhere, albeit in different ways. Once viewed as a theory, climate change has become an undeniable fact. Whether an organization is effectively managing and measuring its carbon footprint has become a mark of how sensitive it is to climate change, or whether profitability takes precedence.

Finally, diversity and inclusion address the critical issue of respecting human dignity, across different cultures, genders, orientations and ages.

These can be directly acted upon, with Boards of Directors for example, examining and measuring their carbon neutral commitment and how well they are faring on inclusivity from one year to the next.

By bringing together leaders and Boards to set goals on these three metrics, companies can further unlock the power of a common purpose, which, according to the Harvard Review, can reinvigorate a company’s growth. More importantly, tracking metrics like these can foster greater sustainability in the immediate present and for the unfolding future.

Related perspectives

ESGCloud is a SaaS platform that roots ESG in company performance by connecting ESG effort to competitive strategy and opportunities, and in turn profitability.

The software is innovative and intuitive to use, and features have been created with the end user in mind, making data collection and reporting easy through an all-in-one ESG tool.