Your environmental, social, and governance data is valuable – if you know how to use it.
Investors, marketers and business leaders are increasingly focusing on environmental, social, and governance (ESG) performance as part of corporate valuation and the development of long-range thought leadership campaigns. In today’s clean energy-focused world, organizations must operate sustainably and responsibly in order to justify the value they generate.
ESG reporting provides stakeholders inside and outside of the company with a broader view of how the company works especially when it comes to clearly and transparently communicating these new corporate social responsibility guideposts set for their brand or business.. In particular, these reports help people understand the company’s stance on risks.
These risks are significant. The COVID-19 pandemic has shown investors and executives that financial figures can’t be trusted to tell the whole story about how resilient a company truly is.
Highly resilient organizations with clear ESG policies withstood the impact of pandemic restrictions and shutdowns far better than those without. Investors and consumers are now looking for signs of resiliency against other destabilizing factors, like climate change, shifting demographics, and disruptive technologies.
ESG issues are now critical business issues. Organizations that plan on thriving in this environment need to draft responsible ESG policies and showcase their ability to follow through on the promises they make.
Demonstrating ESG Leadership Unlocks Real Value
Crafting and implementing ESG goals is not a piecemeal process. It can challenge the way a business works. It can demand leaders answer difficult questions, and it can lead to positive transformative change and elevated brand reputation.
But ESG leadership is a value-generating asset unlike any other. Organizations that demonstrate ESG priorities can make a convincing argument for their resilience and sustainability. This can produce positive effects throughout every level of the company and its activities:
- Shareholders are increasingly rewarding companies with transparent, effective ESG governance structures. Shareholders want to see reporting aligned to external frameworks and year-over-year performance over stated goals.
- Employees value equity, inclusion, and diversity. ESG initiatives can give them job mobility through strategic training and development and support individualized work-life balance goals that promote employee well-being. This has a positive impact on employee retention and productivity.
- Customers attach meaning to organizations that develop ESG initiatives and consistently follow through. Product value is now about more than just price and durability. Customers want to know where, when, and how products are made.
- Suppliers have been hit hard by partnerships with unsustainable buyers. Supplier contracts are increasingly placing value on business ethics and human rights. Sustainable products and practices improve sourcing throughout the supply chain.
- Communities benefit from ESG initiatives through job creation and stability, as well as the protection of capital and local resources. Without strong community support, social and political obstacles can seriously impact long-term success.
For example, Hahn Public has put the first steps in place towards leveraging ESG priorities in the propane industry. Its environmental thought leadership campaign for the Propane Education & Research Council (PERC) uses first-party data to position renewable propane as a sustainable low carbon emission fuel source. Its argument is compelling because it relies on credible data curated from among the propane industry’s most reputable organizations.
Escalent is taking research and communication even further, offering insights that go beyond environmental thought leadership and provide competitive intelligence into social and governance trends for the utilities industry. This content helps utility providers bridge the gap between how they think about issues like reliability and how their customers and stakeholders view those issues.
Use First-Party Data to Inform, Deploy, and Showcase ESG Initiatives
Leveraging ESG initiatives to generate sustainable value requires setting attainable goals and meeting them. The process companies use to set those goals are important, as failing to meet them can have disastrous consequences.
You can’t simply copy ESG goals from one company to another. Every ESG priority must be the result of research, informed by data, and evaluated with professional scenario planning tools. This means identifying relevant metrics to measure, managing progress, and communicating it to employees and stakeholders.
The first question business leaders must answer is what data they plan on using to inform the ESG goal-setting process. The best place to look for this data is in your organization itself. First-party data is the richest source of guidance for ESG goal setting because it’s already there, and it’s yours.
Analyzing first-party data to generate insights that can lead to robust, attainable ESG goals. Companies that evaluate themselves using this data can make sure they announce goals that are progressive and ambitious without running the risk of failing to meet expectations.
The Right ESG Data Ensures Clear Communication
The first-party data you use to inform ESG goal-setting will influence the metrics you choose to communicate your progress to the public. The better your analysis and forecasting techniques are, the more accurately you can set achievable goals and communicate them effectively.
This article is the first in a multi-part series we’ll tackle this year on how data can inform and shape a long-term ESG strategy.
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