ESG – Not just a Cost Center

The benefits of an effective ESG program are significant.  The key is hiring an ESG professional who can implement a focused ESG program tied to ESG metrics (goals) relevant to your organization and industry.  An effective ESG professional will help your organization limit your ESG metrics to those that can be tracked while being fiscally responsible. Below are some of the benefits your organization might encounter by implementing a strong ESG program.  If leadership questions the value of such a program, I would consider using a subset of these benefits that are most relevant to your leadership style, industry and organizational culture.

1. Allows your organization to contribute to making their place in the world a better place environmentally, socially, and from a governance perspective
2. Prevents organizations from out of control ESG metric adoption that can cause financial distress or loss of focus on the organization’s mission
3. Creates an environment that will attract and retain loyal customers
4. Builds a culture through human capital initiatives will attract and retain employees
5. Further supports corporate initiatives
6. Builds confidence in existing relationships and attracting new business partners; attracts organizations that are under intense pressure to use effective ESG suppliers
7. Measuring ESG metrics in real time improves strategic decision making and adaptability
8. Adds premium to your valuation when raising funds or selling a business
9. Limits legal liability by activists on social media
10. Minimizes potential allegations of greenwashing or “ESG metric cherry picking”
11. Improves your ESG scoring or ratings by a third-party organization
12. Better prepares the organization for future regulations and public focus on new ESG metrics
13. Provides leadership with a deeper and broader understanding of the business they are responsible for operating

Your organization will have environmental, social, and governance goals/metrics whether or not you implement an ESG program.  The real question is, will your ESG activities be under your control and effective or randomly implemented on a department-by-department basis? Inadequate ESG planning can result in out of control ESG spending and distract you from your mission, but the benefits are real and numerous if done right.