For ESG leaders in the January – December fiscal cycle, as you enter your 2024 budget planning, these questions may arise about your partnerships and coalitions: do we really need to pay all these fees? What are we getting in return? Can’t we just tell our suppliers/internal teams/etc. to just do the work themselves?
Here’s a simple primer to help those of you who need it, to structure the business case in your budget conversations.?
Partnerships?are one-to-one relationships between companies and NGOs, UN agencies, governments, and in some cases, other companies. In an ESG partnership, like any other, the partners share a common problem to solve, and they combine their resources to solve the problem. Common resources are key. Without that, these are fee-for-service buyer-vendor relationships.
Coalitions?are one-to-many relationships, where companies engage industry associations, or join multi-stakeholder groups (e.g. NGOs, governments, private sector, etc.) to solve problems that are common across all the groups.?
The nomenclature is a bit fuzzy ‘in between,’ where you see the word ‘partnership’ used by smaller coalitions of partners but in general, think: one-one vs. one-many.?
- Systemic issues and economies of scale:?Companies will continue to hold accountability to work on their own operations and supply chain, but there are many ESG issues that companies cannot solve alone. For example, if a company needs to collect its packaging, it needs recycling infrastructure. If it needs to increase renewable energy in its operations, renewable energy must be available. Coalitions can help generate the critical mass of voice and market demand to address these systemic needs. Partnerships can bring stakeholders and solutions of different facets together (for example, NGOs can build best practice farmer and worker programs in communities where companies source raw materials).
- Industry signals to suppliers:?As early as 20 years ago, when large companies began going beyond their own operations and engaged their suppliers on Sustainability and other ESG issues, suppliers soon began to be overwhelmed by the number of asks. What tends to happen (and will continue to happen as regulations and frameworks progress), is that each buying company forms their own bespoke metrics and reporting formats for their suppliers. Suppliers who sell to multiple companies then spend more time filling out each supplier’s form in a slightly different way than all the others, rather than filling out one standardized form and using the rest of their time to work on improving their performance to report. Smaller buying companies often do not get as much traction with their suppliers because the suppliers are busy working on multiple asks from big buyers. Industry associations and coalitions can come up with trade compliant common standards and reporting frameworks for suppliers so that all members can move forward without duplicating.?
- Credibility:?Good quality partnerships and coalitions play a ‘checks and balances’ role. They do their due diligence on companies before working with them, and they have an implicit or explicit code of conduct they apply to continuing to work with companies. Partnership and coalition programs tend to have published intent, design and reporting, which is critical for transparency. Partners and coalitions can also serve as a sounding board on the design of company policies, strategies, and actions. They can also provide companies with benchmarks and standards of good practices. The best and closest partners also serve a ‘critical friends,’ proactively engaging companies when they see the need to weigh in on issues.?
Things to consider in your work:
All ESG leaders I know are running a mile a minute, so it’s often easy to keep going on autopilot with partnerships – keep the ones you have, don’t add more if there is no more budget. This need not take much time, especially if you build it into your overall strategic planning and governance. And I hope that doing this work will reduce the time spent on questions at the beginning of this article.
- What is your overall strategy and which partners and coalitions will help you execute it best?
- Are there any partnerships and coalitions whose alignment with your strategy is unclear? What conversations do you need to have to get clear?
- Are there any strategic shifts you are making that require you to seek new partnerships and coalitions?
- Keep track of annual objectives and deliverables of partners and coalitions, including any shifts due to both your company and the partner’s context. Remember – coalitions may move big things but at timelines that aren’t always familiar to business leaders, so build in the long-term vision, the overall timeline and the ‘why’ of the timeline.?
- Within your company:?build partnerships and coalitions into your strategy and roadmap alignment. Familiarize business leaders on long term vision and timelines if they are new to the ways of working with partners and coalitions. At key milestones and moments of progress by partnerships and coalitions, make sure you circle back and inform your business leaders about these in a business-relevant way. Collaborate with your legal and government affairs team to make sure that all the necessary due diligence on all partners and coalitions is maintained, and your team is trained on trade rules and company norms.
- With partners and coalitions:?build at least an annual, if not semi-annual check in to provide and receiving feedback on how the relationship is going and what, if anything, needs to be adjusted. The two-way feedback is critical to strengthening the partnership and any course corrections.?
- Which are your company’s top 1-3 partners and coalitions that you want to engage and influence a the ESG leader? How will you link that back to your deliverables and performance in agreement with your manager?
- Which are the partners and coalitions that you want to give your team an opportunity to manage? If there are people in your team who are new to partnership and coalition engagement, how will you ensure they get any necessary compliance training as well as leadership coaching to represent the company’s voice?
- If you have partners and coalitions for which there is no relationship manager in your team or other parts of the company, what are the implications of that? It may be okay to leave some coalition engagements unstaffed– you simply need to make the call. I do not recommend you leave any partnerships unmanaged.
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