THE VALUE OF ESG IN INVESTOR RELATIONS
Sustainability isn’t just a buzz word and there’s value in prioritizing a sustainable narrative for your business. With robust ESG reporting and communications strategies propelling businesses towards long-term value at various stages of growth, the benefit of building an investor relations strategy that includes a strong ESG proposition has become quite clear in recent years.
By focusing on ESG (Environmental, Social, and Governance), companies can better achieve their business objectives while attracting investors. In EY’s 2020 DNA of the CFO Survey, it was reported that 74% of financial leaders say that investors are increasingly using non-financial information in their decision-making. These non-financial aspects of business, including the ESG framework embedded into business strategies, are helpful for stakeholders to identify risk and opportunity.
ESG forever
ESG efforts hold their own merit based on intent alone. The long-term value of ESG initiatives can be the push a business needs to stay relevant and reliable. ESG efforts within a business are intended to make the world a better place, whether that be through environmental efforts, diversity and inclusion through social change, or policy making on the governing side of things. But in terms of the long-term trajectory of your business, you can expect efforts in this space to positively impact your business in all areas, such as better employee retention, investor interest in your longevity efforts, and aligned values for all key stakeholders.
Integrate sustainability everywhere
Integrating sustainability into your business strategy is a bit of a juggling act, but it really shows when companies nail their strategy. That said, once you’ve set out a clear roadmap to ensure your business is operates within its defined ESG values, it gets a lot easier to communicate your business’ long-term value to stakeholders.
Some simple ways to start building your ESG business strategy:
Get a deep understanding of your industry and the environmental impact it has historically had. From there, you can come up with a strong plan for how you will set yourself apart from the rest with an earth-first attitude.
Believe wholly in doing good and being good, and the social structures will follow. Stay educated on recent diversity, equity, and inclusion efforts, and don’t be afraid to update your standards as the world continues to change. Staying on top of the curve here will position your values clearly.
Keep in touch. Take note of the people in your corner (and the people you want to be there) and maintain efforts to keep them in the loop on your ESG plans and actions. This is the “governance” side of ESG that plays into connectedness and genuine relationships.
Reporting and performance
Creating transparency around ESG will keep stakeholders engaged while allowing your business to reflect on efforts and make changes accordingly. Putting together a standardized system of ESG metrics will bring more alignment in goals and actions to ensure long-term value in this space.
Traditional ESG reporting structures include:
People — This reflects your company’s genuine equity and employee treatment. Metrics may include health and safety, wage gaps, diversity reporting, professional development initiatives, and more.
Planet — This reflects your company’s impact on the environment, plain and simple. Metrics may include emissions, resource use, and environmental initiative tracking, among many others.
Prosperity — This reflects how your company impacts its community. Metrics may include taxes paid, employment generation, research and development, etc.
Principles of Governance — This reflects your company’s core purpose, your strategy to enact it, and accountability to your governance. Metrics may include risk assessment, growth opportunities, and overall commitment to ESG efforts.
Getting started
“I think a lot of people believe that ESG is really complicated, and it is complex, but you have to start somewhere,” said Alyssa Barry, Co-Founder and Principal of irlabs.
If you’re in the early stages of your ESG journey, stepping into this space can be daunting. In a conversation with Qayyum “Q” Rajam, host of Real People Real Impact Podcast, Alyssa Barry, irlabs’ Co-Founder, discussed the value in strengthening your business’ ESG efforts along and practical tips for businesses that are in its early growth stages. Alyssa says, “Assemble a group internally. Bring together different individuals across the organization just to start having the conversation and dealing with the low hanging fruit.”
With a solid understanding of your business’ long-term goals (along with having the right intention behind them), you can expect to see exceptional business growth through your ESG efforts. Ultimately, these initiatives will not only have a tremendous impact on the future of your business, but it will also help you better serve the communities you are a part of.
