Due to increased regulatory pressures, operational risks, and stakeholder expectations, ESG compliance has become an essential strategy to drive long-term sustainable benefits.
In this article, you’ll dive into the world of ESG, exploring what it is, the benefits it brings, and the steps you need to take to integrate it into your organisation.
What is ESG and why does it matter?
Environmental, Social and Governance (ESG) is a set of measurable, non-financial standards used by stakeholders to judge a company’s performance and its impact on sustainability issues.
Stakeholders use ESG in different ways: investors use it to make responsible investment choices, customers to choose products and services, and employees to better understand a company’s culture and activities.
Embedding ESG comes with many benefits. It can help you to:
- Create better investment opportunities as you look better positioned for long-term success.
- Strengthen your social license to operate, boosting brand reputation and stakeholder trust.
- Attract and retain talent by encouraging employee engagement, satisfaction, and loyalty.
- Stay compliant with regulations.
- Improve long-term profitability by driving operational efficiency, reducing costs, and managing risks.
How to embed ESG into your strategy and operations
Step 1: Identify your material topics
The first step is to understand which ESG topics are the most material (meaning the most significant and relevant to your organisation) across your direct and indirect operations. To identify them, you need to undertake a double materiality assessment, which is made up of impact materiality and financial materiality tests.
Impact materiality evaluates which ESG topics have a significant impact on people and the planet, whilst financial materiality analyses how these can influence your company’s financial performance over time.
Gaining these insights can provide direction for your overall sustainability analysis and identify which ESG issues are most relevant to your business.
Step 2: Measure what matters
Once you identify your material ESG topics, the next step is to collect data that will help you set accurate targets.
To do this, you should introduce consistent processes for data collection across your business and focus on metrics that align with your strategy, industry standards, and stakeholder expectations.
Use internationally recognised frameworks, such as the Global Reporting Initiative (GRI), to define clear and globally comparable indicators that can strengthen both your credibility and transparency.
Also, make sure the data you collect is verifiable and linked to business outcomes. This way you can gain an accurate picture of your company’s performance.
To make your ESG reporting more actionable, focus on your material topics as it will support better decision-making and drive long-term value creation.
Step 3: Set clear and actionable targets
With the right insights in place, you can set tailored targets that are both ambitious and realistic, reflecting your industry, operations, and stakeholder expectations.
Data will help you create targets that are measurable and aligned with your material priorities (identified in step 1) and long-term strategy. Also, you’ll need to make them achievable. SMART goals or other structured approaches can help you set deadlines, measure progress and provide direction and focus.
Please note, becoming sustainable doesn’t happen overnight, and if you try to tackle everything at once, it can be overwhelming. That’s why setting clear targets and having both short-term and long-term goals will be vital for your success.
Step 4: Secure stakeholder buy-in
Implementing an ESG strategy is not a simple transition, but a full-on organisational shift. For it to go smoothly, everyone across your value chain must share the same vision and be open to collaboration.
So, it’s more than just informing stakeholders of your goals – it’s about actively involving employees, customers, investors, and suppliers in your sustainability journey.
For instance, to gain support from your employees, take the time to educate your teams and launch internal initiatives that reinforce your ESG goals.
If you want to secure buy-in, focus on clear communication and ongoing engagement.
Step 5: Integrate ESG into your business model
To really integrate ESG into your business, you need to make it part of how your company creates and delivers value.
To achieve this, align your ESG priorities with your core strategy so that it influences decision-making at every level – from boardroom and product design to supply chain management and investor relations.
On top of that, introduce rules and policies that hold leaders accountable, support sustainable practices, and connect ESG goals to your financial performance.
Most importantly, don’t view ESG as a compliance exercise. Instead, see it as a driver of innovation, resilience, and competitive advantage. By weaving ESG into your business model, you create long-term value for both stakeholders and shareholders.
Step 6: Monitor, report and improve
Implementing your ESG strategy is only part of the job. To stay on track with your targets, you need to monitor performance and report on your yearly progress.
Frameworks like the Taskforce on Climate-Related Financial Disclosures (TCFD), Global Reporting Initiative (GRI) and Streamlined Energy and Carbon Reporting (SECR) can help you achieve this.
Not only does this provide insights into what’s working and what needs improving, but also helps you meet disclosure obligations and maintain stakeholder trust.
Lastly, sustainable transformation is not a straight path. New regulations and emerging risks can change your trajectory. That’s why it’s important to constantly adapt and refine your strategy based on what comes your way.
How can Inspired help?
ESG is much more than a compliance exercise – it offers a competitive advantage to those looking for a smarter, more integrated way of operating.
From developing a bespoke ESG strategy to meeting unique reporting requirements, Inspired can support your transition to a low-carbon economy and help accelerate your sustainable transformation.
To discuss your needs with a member of our ESG team, please call 01772 689 250 or email [email protected].
