How to Keep Up with the Changing Times

We are entering a period of major change in ESG policy and market trends. Governments and financial institutions are investing billions, even trillions, in sustainable technology and energy. At the same time, investor, customer, and regulatory expectations around ESG issues like climate, human rights, and board oversight are skyrocketing. As these trends converge, your business will need to respond with a holistic, comprehensive ESG strategy.

Here are some recommendations for building an ESG strategy that’s responsive to the changing times:

Be Proactive rather than defensive.

ESG requirements are proliferating, so it’s crucial to act rather than wait. The pace of future change may be difficult to predict, but the magnitude will be significant. Anticipating and taking action now will ensure your business can capitalize on what’s coming and be seen as a leader.

View ESG risk as an interconnected system.

Many companies approach ESG as a set of unrelated issues, with responsibility spread across multiple functions and teams. However, climate change, human rights, governance, and many other ESG topics are interconnected - to make meaningful progress on any of these issues you need to manage them all in an integrated way.

Lead from the board.

Strong governance is critical for credible action on racial equity, human rights, biodiversity, and climate, and it starts with your Board! Having a Board that’s engaged on ESG issues will help you integrate your company’s risk management, financial planning, and strategy efforts.

Anticipate policy and regulatory change. 

Most US states have legislative sessions planned for early 2023, and major markets (including the US and EU) are finalizing significant new policy requirements as we speak. It’s important to understand the patchwork of upcoming legislation and how it could affect your business so you can plan ahead.

Identify your most material ESG issues.  

With new consumer behaviors and even new science, you’re likely facing a more complex set of ESG issues than ever before. Now is the perfect time to engage your stakeholders and conduct a fresh materiality assessment to understand which topics matter most. 

Manage your entire value chain. 

Whether it’s climate, human rights, or product circularity, your business is expected to manage impacts across the entire value chain – from your most distant suppliers to end-of-life disposal by your customers. This will require new data, deeper engagement with suppliers, and better visibility over your entire supply chain.

Next Steps

In the United States, the ESG tide is turning. Whether at the federal, state, or corporate level, action and investment has never been stronger. And while climate has been a major focus this year, the need for an integrated approach across a broader set of social and environmental issues is gaining traction. To manage shifting market trends, public policies, and stakeholder expectations, it’s time to make ESG a critical part of your company’s DNA.


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