How organizations can bridge the expectation gap between stakeholders and ESG initiatives



The message from stakeholders is getting stronger every year. People expect and demand the companies they work for, buy, invest and engage for with a focus on impact and working to make the world a better place. More and more people are not just measuring the success of an organization in terms of products, ROI or compensation. They are increasingly interested in how organizations get things done on environmental, social and governance (ESG) issues.

This orientation is not new, but historically, requests for social and environmental impact have come from small groups of specialized stakeholders. It has changed a lot in recent years. The number of stakeholders (e.g. employees, customers, partners, communities) demanding impact has increased, as have expectations regarding the types of social and environmental initiatives and what is expected of companies in terms of initiatives. , investment and impact. Today, 84% of consumers around the world consider sustainability to be important when choosing a brand. Additionally, 69% of workers are more likely to work for an organization they see as environmentally sustainable, and half of consumers would accept lower pay for working for these types of organizations.[1]

For society and our world, focusing more on the challenges we face is a positive development. For businesses, bruised and strained over the past two years in the face of the challenges laid bare by the pandemic, racial injustice and environmental unrest, little time and effort has been available to engage effectively and efficiently with stakeholders, clearly articulate their impact objectives and execute coordinated efforts to achieve these objectives.

As a result, while companies devote significant time, effort and financial resources to the ESG demands and priorities that have arisen, these efforts have been largely reactive, rather than proactive, focused and strategic. Companies have shot many arrows in many directions without first defining a coordinated set of social and environmental impact goals. Without this set of clearly articulated impact areas and goals, and a strong mechanism for stakeholders to engage and discuss issues as they arise, companies often struggle to keep up with ESG requirements. Without the ability to set their own priorities, timelines and benchmarks, companies find themselves accountable to all stakeholders for all ESG matters, even if they are unrealistic or tangential to the organization’s core mission.

Define the ESG expectation gap

This “expectation gap” between what stakeholders want for a company’s social and environmental impact and what the company is able to define, communicate and compare creates the potential for dissatisfaction and Considerable stakeholder activism that could lead to staff turnover, legal issues, loss of clients and press.

This challenge is especially important for small and medium-sized businesses that currently do not have dedicated resources focused on closing the gap from impact expectations and proactively managing the organizational and reputational risks it creates. Fortunately, there are proven steps leaders can take to bridge the expectation gap and create a competitive advantage in the ESG space.

4 steps to achieve a more strategic ESG program

As organizations seek to recoup their impact efforts and develop long-term strategic initiatives, here are four key steps to take on this journey.

1. Take stock of current and proposed efforts – One of the challenges of having an impact defined by external forces is that organizations may not even be credited for the initiatives they undertake. The first step for board and management leaders is to collect and assess the efforts, goals, understanding, capacity and resources currently allocated to social and environmental impact in the organization. This effort will provide an important view of the impact in the organization to inform planning and discussions for the desired future state. In addition, by launching this initiative, engaging with stakeholders and signaling the company’s desire to better define the desired impact goals and the structure to achieve those goals, the organization is already committing to the path to reducing the gap in stakeholder expectations.

2. Establish goals and priorities Based on these findings and recommendations, organizations are well positioned to engage further with stakeholders to define desired impact goals as well as align and coordinate implementation efforts to achieve those goals. . They can determine where their efforts will be focused and what success will look like, both internally and externally.

3. Formalize efforts – As the external and internal focus on impact has grown, more and more organizations have decided to devote dedicated resources and leadership to ESG efforts, even going so far as to create an impact office. or other ESG divisions and integrate their leadership into the C. suite with positions as Chief Impact Officer or Chief Sustainability Officer. Regardless of the size of the company or the sector, this step makes it possible to maintain dedicated resources and demonstrate a sustained ESG concentration for stakeholders.

4. Demonstrate progress – In almost all cases, stakeholders understand that it takes time to create social and environmental change. They know the size and scope of the problems are huge and that one organization will not solve them overnight. However, these same stakeholders expect clarity regarding an organization’s impact goals, inclusion and visibility to help achieve the goals, and confidence that the organization has the focus and ability to work to achieve goals. Success for organizational leaders is not about meeting impact goals today or even this year – success is about creating a clearly articulated destination and demonstrating progress on the path to getting there.

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Joshua Burgher is a director at PKF O’Connor Davies and helps lead the company’s management consulting services focused on environmental, social and governance initiatives, including its attestation services and Quickscan assessment, which assesses the current state of an organization’s social and environmental impacts and serves as a starting point for further collaboration with the firm in the development and implementation of impact programs.

[1] Source: https://www.ibm.com/downloads/cas/WLJ7LVP4


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