With clients, employees and investors placing increased emphasis on the role of corporate citizenship, the pressure is on for the enterprise community to develop strategies and deliver initiatives that showcase regard for a healthier planet and a more equitable workplace. These defining principles, collectively known as environmental, social and governance (ESG), serve to create a better work environment, to quantify the impact of current business decisions, as well as guide future investments.
Each company identifies its ESG strategy and included focus areas differently based on how and where they can make the biggest impact. But generally, ESG is focused on how an organization affects the planet (environmental); how an organization cares for its employees, clients and communities (social); and how it conducts itself (governance). Initiatives that span across the ESG framework may include robust policies focused on business ethics, data security and privacy; reductions in carbon emissions; migration to digitization to decrease paper use; optimized benefits packages for employee well-being; integration of diversity, equity and inclusion (DEI) practices; and an increase in spend with diverse suppliers.
While Sedgwick has been committed to ESG practices for a long time, in 2022 we developed our ESG vision, an intentional, multiyear strategy designed to maximize our global impact by 2030.
For global corporations like Sedgwick, establishing an ESG strategy and identifying future opportunities for growth takes time and effort—the effort of many. With experts increasingly seeing the value of ESG not just in terms of enhanced employee experiences, but in terms of improved business performance and as a source of low-risk returns, organizations that have yet to identify ESG priorities are well-positioned to do so. Here’s how.
Making a plan: establishing an ESG framework, focus areas, timeline and KPIs
A well-designed ESG strategy is specific to the company it’s designed for, so it can be relevant to that company’s operations and offerings and have the biggest positive impact on clients, employees and communities.
To begin making strategic decisions, it’s important to do some groundwork: Understand the competitive landscape, assess what your company has already been doing in ESG, and identify external frameworks for potential alignment, to name a few. It’s also necessary to understand the areas where your company can have the largest outcomes relative to your specific business and industry. Establish an ESG framework that includes those focus areas you’ll double down on. Then, as you would with any other business strategy, identify your initiatives, timelines and KPIs. From there, ongoing governance and communication of progress, both internally and externally, is important.
To achieve cohesiveness in identifying and executing a global ESG strategy across geographies and business units, it’s essential to establish an ESG committee that includes the business owners of each of the identified focus areas. For example, an organization’s ESG committee may bring together the leader of procurement, the head of legal and compliance, the DEI leader, and so on. This enterprise-wide team will yield unique perspectives and linkages that highlight where real growth opportunities lie. It also ensures that when decisions are being made within the ESG strategy, these decisions can be executed upon effectively throughout the organization and that everyone is aligned to the same strategy from the beginning— all “rowing in the same direction.”
Then ongoing governance of the identified ESG focus areas and initiatives is important to drive strategy implementation and the measurement of KPIs. Communicating progress to key stakeholders both internally and externally can keep momentum going.
Standardization vs. reality
Leaders in the space know there are frequent calls for standardization of ESG-based actions and measurement. The challenge is that no two companies are alike; one may identify focus areas that are not relevant to another. For example, Sedgwick offers environmentally-focused client solutions through EFI Global, such as fire investigation and accident reconstruction, as well as offerings through our brand protection and repair solutions, whereas other organizations may not have comparable services.
It’s also possible for ESG initiatives to be at varying stages of progress within a single organization. Overlaying the identified global ESG framework on top of all geographies in which a company operates is a starting point to ensure consistency. It is likely to highlight localization needs of the global strategy, wherein a particular region may be more advanced in its journey of specific efforts. Consider the UK, which is well-known for its “green” legislation, promotion of sustainable solutions and rigorous compliance requirements which may accelerate the delivery of certain initiatives relative to that of other countries. Building a global ESG strategy that is applicable in all operations and agile enough to enable localized implementation where needed ensures that the strategy is truly globally relevant and truly enterprise-wide.
Aim for “baked in” ESG, but leave room to grow
“Baked in” means practices are embedded in how an organization conducts business. That means ESG is not an “extra” effort but that its needs are considered as part of standard practices.
Another example of baked-in ESG can relate to an organization’s diversity, equity and inclusion (DEI) strategy and initiatives. An organization with baked-in DEI principles will have moved beyond creating an individual training here or standalone program there to an integrated approach in which DEI practices are embedded into talent processes, including recruitment, talent review processes and succession planning processes, as examples.
Looking ahead
Being clear about your ESG strategy and effectively implementing will be critical to success. The roadmap for ESG strategy creation and delivery is clear. It also allows for many moments of discovery to adapt and pivot. Organizations must remain agile, growing and flexing as circumstances and needs evolve —allowing room for emerging priorities and shifts.
Making a positive impact on the world is a timeless pursuit with limitless possibility for sustainable growth and requires a thoughtful, intentional approach.