Beyond Glasgow & COP26: Business' response to accelerating ESG demands

This week, political leaders from around the world are again gathered at the latest UN-sponsored summit to address the climate crisis – COP26 in Glasgow, Scotland. Considered to be the most important climate conference in years, more than 100 world leaders and delegators will aim to create a plan to aggressively cut greenhouse gas emissions enough to stop the most urgent effects of global warming. Decisions made at COP26 could impact the way we live, eat, travel and conduct business.

While progress has already been made in the first few days at Glasgow, the reality is that a single conference likely won’t be enough to generate the kind of momentum scientists say is needed to address the profound environmental and sustainability challenges the world faces. This means demands are almost certain to grow for business leaders to deliver change on environmental and sustainability practices.?

Whether or not public policy enforces ESG goals, businesses have a responsibility to challenge themselves to go above and beyond what’s required of them, and act as good stewards for all stakeholders. This means determining how ESG commitments become realities embedded in the way their companies operate and not just a passing catchphrase.

As I talk with business leaders and as Diligent?continues to refine and build out an ESG business information system so companies can effectively?monitor and achieve their ESG goals, several things are clear about forging a successful path forward on making ESG an embedded reality in how companies operate.

Getting ahead of the curve

ESG requirements from governments, regulators, investors, employees, and other stakeholders are only going to build with time. Organizations need to understand that reality and be proactive in their approach to managing these demands.?

Leaders need to embrace – now – the tools needed to manage the growing amount of ESG data they will be expected to collect, and to define, assign, implement, track and report ESG commitments. Such tools can help leaders spend their time being more effective in executing on ESG initiatives to drive real change, in addition to satisfying ESG disclosures and filings. What all of this leads to is a culture of continuous improvement on ESG initiatives within organizations,??and the creation of high-performing companies that are tangibly measuring against their commitments to make the world a better place.?

Taking an integrated approach

ESG has across-the-enterprise implications from talent acquisition to risk and compliance to public relations to overall business success. As a result, in designing ESG practices, leaders must ensure they touch all aspects of an organization and are not siloed away as something apart.?

A mission-critical element to embedding ESG in this way is ensuring enhanced visibility throughout organizations so there are no blind spots for senior leaders nor any confusion about expectations for those charged with ensuring day-to-day operations complement ESG goals. Having nimble systems in place will also help ensure organizations can adapt in real time to a diverse set of demands – demands sure to evolve at breakneck speed going forward if the past 19 months are any guide.

Embracing the long view

At its core, ESG is about structural change, which, by definition, doesn’t happen overnight. For example, while progress can and must be made in the short-term on diversity, equity and inclusion, a truly representative workplace at all levels of organizations will take time to create. Operating at net zero emissions will take even longer.?

As a result, it is crucial that organizations, as they create and execute ESG strategies, do so looking at a long—term horizon and ensuring it is part of their plan for continued value creation and driving positive impact.

In short, while embracing ESG is about changing business practices, it is also about changing organizational culture. The demand for such changes from employees, clients, investors, and regulators alike is almost certain to intensify, especially if we don’t get the momentum out of Glasgow that we had hoped for, and that the world needs. The ability to deliver change depends on leaders getting ahead of the curve, taking an integrated approach, and keeping a focus on creating impact across a long-term horizon.