The ESG News Review: Is now the time to look again at your ESG goals?
Any business that has spent time pouring over the broad ESG spectrum in order to set goals that are the most appropriate, and that it can commit to, can be forgiven for having a toe-curling moment when reading that headline.
The setting of clear, measurable and ambitious goals that represent a major shift in strategy has gathered pace in the past couple of years.
Cast your mind back to the weeks before the pandemic was declared and the news was full of companies like BP, Microsoft and AstraZeneca announcing net-zero or sub-zero carbon change targets, with the Government later hailing that a third of UK companies had made similar commitments.
Some businesses have an array of goals, perhaps with two or three primary ones and a longer list of those that represent long-term commitments, on which pencils have probably been sharpened if they were formed several years ago.
While the last thing any firm should do now is renege on those targets – or ambitions, if softer language was used – it’s also important not to lose sight of the fact that as ESG definitions continue to become clearer and as the world changes around them, companies should consider keeping the breadth and depth of their goals under ongoing review.
This Financial Times article this week – while an opinion – covered the ground well. It mainly made a case for how companies should set ESG goals in the first place, but much of it applies equally to those that may need to refresh their goals, and most importantly to those that need to sure goals are directly aligned with what matters most to the business.
Why is now a good time to look again at ESG goals? Well, of course, the enormous disruption of the past 15 months has likely also disrupted the progress towards certain goals for a lot of businesses. Take net-zero for example: many firms have been forced into shutdowns that have reduced their output, while others may have had to go the other way to meet extreme demand.
But that’s just one factor. A more acute one may be that the agendas of institutional shareholders have changed. Rather than trying to read the tea leaves on their voting behaviour, data analysis can now begin to isolate many of the priorities of individual investor groups to better understand their ESG priorities.
ESG goals that are tuned to what investors want to see – both existing investors, and more ESG-minded ones that a business may want to court – may now be more specific and more actionable than goals that have been in place for some time.
This is a level of strategic planning that communications teams can play a part in, with the right information and an understanding of how to form meaningful pictures. ESG goals will remain central, but the reputation that a business holds amongst shareholders, customers, partners, employees, legislators and all other stakeholders can be shaped to align to their expectations more precisely, and so be a more direct fit with what the business needs.
It may not mean setting more goals, but it could mean tightening them up, making action towards them more deliberate and evidence-based, and making reputation an integral consideration.
The ESG News Review is written by Steve Earl, a Partner at BOLDT.
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