What are the most common ESG implementation mistakes?

The best way to develop a clear implementation process is to start at the macro level and work down. Mission and vision: how does ESG fit into the mission and vision of the business? Strict materiality: what are the really important topics and why? If more than half of the topics you have analyzed are very relevant, the analysis is wrong. Ambition: having the material topics clear, what is the company's ambition for each of them? Do you want to be best in class, average or focus on minimum compliance? Targets: once everything else is clear, we can transform ambitions into targets. At least in the priority topics, there should be a SMART target for each one.

Practically, the first step is to stop extensive "greenwashing" at the executive level. Then make sure you assign a proficient subject matter expert to oversee the Corporate ESG program, or engage external consultants to contribute to shaping the framework and facilitate the implementation. Keep it straightforward, realistic and make sure all stakeholders at every organizational level understands what actions required and why, i.e. how their initiatives contribute to the broader goal of 'making the world a better place.' ?? Finally provide with continuous feedback about progress and be agile enough to adapt strategies as necessary during implementation.

These are arguably the top 3, especially for the ones starting out: Viewing ESG as a subject/department in silos and NOT from a ‘systems’ perspective. Not engaging with cross-functional teams. Not identifying material issues in the right way. At times, opinions of key stakeholders (say customers, employees) are not considered. Confining ESG to the four walls of the organization. It should be extended to suppliers for higher levels of coverage and impact.

While the ESG and Sustainability professionals try to implement any ESG project the biggest mistake they make is not giving clear and concise information on the project itself. There are 2 reasons for this. Either we feel very snobbish and feel the people at the other end wont understand anything so don't need to give them enough detail and just give them instructions or we given them too much detail technical know how that they feel overwhelmed and simply cut themselves off the line. Here the key is to understand your audience and give them optimum info, feeling of inclusiveness and most importantly give them the sight of the purpose and benefits particularly for them. Once these are clear the project will be owned by them.

Common ESG implementation mistakes include lack of genuine commitment, treating ESG as a mere box-ticking exercise rather than integrating it into core business strategies. Many firms fail to set clear, measurable goals, leading to ineffective execution and difficulty in tracking progress. Overlooking stakeholder engagement can also hinder understanding of ESG impacts. Additionally, insufficient transparency and reporting can erode trust and invite criticism, while underestimating the importance of adapting to regulatory changes can pose compliance risks.

For successful implementation of ESG, it has to be both hardwired and softwired into an organisation. Hard wired means properly integrated into governance and operations, policy and procedures. Soft wiring is all about embedding ESG into culture. To succeed at this, you need to deliver clarity around what you are committed to and why this is important, engage with all stakeholders and ensure understanding on a function, team and individual level, to achieve ownership and accountability for delivery. When ESG is truly integrated across a company, it becomes business as usual and a lens through which decisions are made and actions are taken. Not siloed, or a bolt on initiative.

Inaccurate data reporting and monitoring solutions can hinder ESG implementation efforts. If the data collected isn't reliable or comprehensive, it can lead to incomplete or misleading insights, making it difficult for companies to assess their performance and make informed decisions. Therefore, having a robust data collection and monitoring system is crucial for successful ESG implementation.

Oh, great another 80-page pdf sustainability report said no one ever... It's a fine line between greenwashing and greenhushing but you have to authentically tell the story of the good you are doing. Your stakeholders though want and need to know about the good work you are doing AND where you are trying to be better. It's also critical that the claims you are making have been verified or can stand up to scrutiny...

Ineffective communication poses a significant challenge in ESG implementation, leading to wasted resources and efforts. To mitigate this, it is crucial to understand stakeholder needs and interests. Aligning messages across different organizational channels, and tailoring communication to diverse audiences, enhances communication effectiveness, cultivates trust and accountability, and bolsters ESG commitment.

Report fails to effectively convey its message to stakeholders. Common issues include complex language, lack of context, inconsistent structure, limited stakeholder engagement, absence of storytelling, ignoring material issues, and limited transparency. To improve communication, simplify language, provide context, organize content logically, engage stakeholders, use storytelling, prioritize material issues, and enhance transparency

ESG was first seen in 2005 as it was adopted by large banks and other similar financial businesses. Accountants saw to it that it was organized around best practices in these industries. Corporations began adopting the practice of ESG in 20l8 when the online community started saying that pollution prevention was "DEAD." Every facility created a unique version of the sharing three elements of ESG - environment, social, and governance. There is no set of best practices to enable the #capitalmarkets to use this information reliably. The "bad news" is there is no company or set of investors that are demanding a standard approach to provide ways to judge the effectiveness of the efforts. Corporations must be less adamant about change.

It is critically important to include ESG in the "plan, do, check, act" sequence of the organization's management system. Many larger companies are asking their suppliers to join with them in using critical management system standards that involve top management and internal stakeholders in the effort. Most current ESG programs fail to do this. ESG can be linked to six management systems for this purpose. These systems include environmental management, energy management, social responsibility, health & safety, governance (ISO 37000), and compliance (ISO 37301). They all are used in the organization's "plan, do, check, act" efforts making them part of what every employee does every day.

Many companies fail in their integration process, and ESG ends up being an add-on rather than a layer of each of the systems that make up the business. Sometimes the problem is one of internal politics. ESG is transversal to the business, but ESG Directors do not always have the hierarchical power to imbue it in areas such as HR, Production, Communication or Supply. How to integrate ESG then? Ideally, you should have the support of the C-Suite. But even without it, it is possible to start the alignment unilaterally, by emulating the rhythm of the company's internal processes. An example: How often is the business strategy formulated and what are the time horizons? Use the same ones for your ESG strategy.

ESG initiatives are driven top down. There are pressures like "Company needs to publish BRSR report with annual report". This ends up becoming a tick the box action. The need is to have a long term, strategic vision broken into tactical steps espeically, where business efficiency gains and ESG can go hand in hand. Let me present a real life example, one of the largest infra companies in India adopted an IoT (internet of things) initiative to monitor their diesel operations at each commercial vehicle level. This not only helped save cost by plugging the pilferages (as high as 50%!), but created real-time records on emissions. If implemented well, such well integrated approach can help trans form ESG compliance to profit centers!

Lack of clarity and relevance of ESG issues to a company's specific business model, key clients and risk management can undermine a company's measurement and management approach. Checking the boxes to align with industry peers is not effective. With limited resources, a company needs to focus on a few ESG issues and build out a comprehensive, robust and defensible multi-year strategy that is core to its business. Relevance has to be based upon risk assessment that reflects the company's production process, products, supply chain and regulatory requirements. With this information in hand, the CSO and management is more likely to succeed in delivering meaningful and easy to communicate results.

Forgetting that businesses have always depended on environmental and social resources for their success. Forgetting this means that ESG is seen as an extra, rather than something that has been fundamental to the business all along.

The worst thing we see is one person leading the impact/sustainability charge. There are so many people in organisations looking for the opportunity to bring more of themselves to work and see how they can help your company solve social and environmental issues. Get them all involved and help bake the impact into the organisation and retain and engage your team at the same time. Win-win!

There are 3 things under collaboration that come to mind to deliver successfully on corporate ESG programs 1) Commitment from C-level staff. 2) Educating and getting buy-in from the board 3) An opportunity to present at an all-staff meeting that shows that you are supported by C-level staff during which you get people across the organization excited about the work you are doing. Without these ingredients you get stuck, because ESG is both horizontally across and vertically deep in organizations. Staff can either collaborate for success or block your need for data, access to systems, resources and people.

I would add that in addition to C-suite support, we need support to integrate sustainability with strategy. Companies that continue to fail doing this will be left behind as irrelevant sooner than they think.

To achieve successful collaboration with stakeholders on ESG we encourage businesses to - 1. Invite many voices to the table, including those who are impacted. Lived experiences are valuable. 2. Commission an experienced independent consultant to interview your stakeholders and report back with key themes. Remember people asked for a faster horse. 3. Develop deep partnerships with those who share your problems, not your necessarily your goals 4. Bring clarity to complexity by creating space to build a shared understanding of the problems to solve across your stakeholders. Capability is a solution. 5. Go beyond compliance into real action by committing to the resources to solve the problems identified as part of everyone's day job.

In today's corporate landscape, Environmental, Social, and Governance (ESG) principles have emerged as key indicators of a company's sustainability and societal impact. With mounting pressure from stakeholders, including investors, consumers, and regulators, many organizations are eager to adopt ESG initiatives. However, amidst the enthusiasm, there lies a significant risk of falling prey to unrealistic expectations and common implementation mistakes. Some of the most prevalent errors made in the pursuit of ESG goals Are:- 1. Lack of clear strategy 2. Greenwashing 3. Ignoring Stakeholder engagement 4. Short term focus. 5. Inadequate measurement and reporting.

Only 4% of sustainability initiatives achieve the results they set out to achieve, and only 47% meet half of these targets. We need to do better. When setting ESG targets, you need to involve two different profiles: - The leader: a subject matter expert in your organization, who is in a leadership position and has a long-term vision. This is where the ambition will come from. - The technician: an expert with less hierarchical relevance but who works on the day-to-day and execution and can understand what it means, in terms of resources, to pursue these targets. They will bring you realism. Finding the middle ground is not easy, but it is necessary. Failing to meet most of your targets is a risk to the credibility of your business.

Rather than striving for flawless initiatives, it's crucial to recognize that sustainable practices lay the groundwork for building a climate-resilient business ready to navigate the evolving landscape of commerce. As technology advances and organizations mature, the path to achieving net-zero emissions will inevitably shift. Flexibility becomes paramount in adapting to these changes. By remaining agile, we can continuously adjust our strategies to align with emerging technologies, evolving market dynamics, and changing regulatory requirements. Sustainability is not about attaining a static state of perfection; it's about ongoing improvement and innovation.

Focus on reports only. Focus on regulations only. Subject to your CEO demands. Fall into CFO pressure. Do not find alternatives. Do not listen to stakeholders. Make a little greenwashing. Justify with how much a penalty will cost. Repeat the mistake. Again and again.

One of the biggest mistakes is focusing solely on short-term gains, neglecting the long-term sustainability of initiatives. For example, businesses may prioritize quick fixes or superficial ESG measures to meet immediate demands, overlooking the need for comprehensive solutions. This approach can undermine the overall effectiveness and impact of ESG efforts in the long run.

Putting the cart before the horse would be one way of describing a very common mistake in ESG Instead of starting with reporting frameworks, start with a materiality assessment. Identify Top 5 and put in a leadership backed action plan around them with clear timelines, resources and a governance mechanism. Also build in a continuous feedback loop. Remember ESG is NOT just carbon or net zero. It's as much responsible sourcing, fair wage policy, workplace policies. And the S in ESG is NOT CSR. The unsung hero in ESG is governance. A multi stakeholder governance council, empowered to keeping the ESG implementation on track is required. And also, the need to build organization and Board capacity in ESG. Its a journey of continuous improvement .

We sometimes underestimate what happens after year one or latest year 2 of the ESG report in a company. While initially one gets away with general pledges and description of policies in the following years these statements have to be filled with life and actual projects that are quantifyable and measurable. I also think much of simplicity so that also internally this is not only a tickbox exercise but can be used as a mindchanging leverage for the team (and of course the customers). Often underestimated is the area of "S" where social and employee aspects come into place, it is very powerful if done and integrated right. Projects for "cut and paste" for year on year comparison can be given to incentivised teams internally to look after.

Some of the most common mistakes are: - Not structuring your ESG initiatives mindfully- ie not alignining them to the issues/topics most material for your stakeholders and the sector - Going too fast, too soon. Setting up highly unrealistic targets across short time horizons inevitably leads to hotch potch and an undersirable outcome - Setting up initiatives for the sake of ticking a box. This usually leads to a waste of time, resources and does not create value for anyone involved - Not budgeting appropriately - Not partnering with the right experts, implementation agencies and stakeholders

First, ESG is a categorization of functions and issues that can pose risk if not well managed. ESG is not a monolith. These issues will and should differ by company, industry, markets. These historically “non-financial” issues should be acknowledged as being anything but and incorporated into the business strategy. If not, they are a bolt on at best and game over if so. Be weary of lip service about integration in the strategy without demonstrable action or clear metrics of how it contributes to the strategy (R&D, M&A, investments, etc). Actions speak louder than words and money talks (loudly).

Some of the most common mistakes that companies make when implementing ESG strategies include failing to make ESG part of the company culture, not syncing ESG strategies with their broader goals or mission, not tracking the right metrics, not communicating effectively with internal and external stakeholders, and not monitoring regularly. It is important for companies to avoid these mistakes and take a holistic approach to ESG implementation to ensure that they are making a positive impact on the environment and society while also achieving their business goals.