Join The Dots: Taking a Methodical Approach to ESG for Your Startup

Join the Dots is a series of podcastsevents and articles designed to equip your business with the knowledge to navigate and understand the complexities of ESG.

Eleanor Winton is director of foresight, which helps companies plan for the short and long term and develop innovative action strategies. Speaking to Maddyness UK, Eleanor discusses the impact of the pandemic on how we think about risk, the challenges and opportunities of ESG reporting, and integrating sustainable practices at work and at home.

The agreement on the SDGs in 2015 gave us, for the first time, a global shared vision of a more sustainable and equitable future, and although it took time for this vision to translate into action and standards on how companies play their part, interventions along the way have helped us stay focused. From the work of the IPCC on climate change to letters from CEO Larry Fink and calls from the Financial Times for a reset of capitalism as we know it, ESG has been front and center for several years. But perhaps the pandemic has helped us see that the risks that ESG issues can generate have the ability to have more drastic impacts on the way we live and work than we previously thought.

Take the first steps in a conscious way with the ESG

When integrating positive ESG criteria into your business, it helps to go back almost to basics. Ask yourself, “How could we design this business if we wanted it to be the most sustainable and equitable business we could create? »

Applying this design mindset can give you a clearer view of what actions to take to have a bigger impact, rather than just focusing on better measuring what you’re already doing. It’s a much more creative and positive starting point for conversation, and can really help engage the team as a whole.

For many companies, it’s not necessarily about starting to do different things or better measuring what they’re doing, but it’s actually about stopping doing certain things. If you were now designing a product company that sold shampoo, for example, you wouldn’t put it in plastic packaging or make it from microplastics.so gradually changing the fact that it’s a live product is unlikely to unlock as much value as rethinking the long term.

Organizational awareness

ESG must be integrated into all aspects of your organization’s culture and structure. From vision and guiding values ​​to performance measurement and supplier relations. Failure to set the tone from the top and go all the way operationally can lead to vulnerabilities.

As the focus on ESG increases, employees and other stakeholders will inevitably put pressure on leaders. We must therefore instill a broad change in behavior and mentality in line with these new parameters for companies. There is an instructive example in the approach employed by some fossil fuel companies to support and encourage good health and safety practices that we can perhaps build on. In this context, operational safety and the minimization of accident risks are instilled in employees, both at work and at home, to reinforce a “safety first” state of mind. By applying this connected approach, we have the potential to create an opportunity for corporate ESG standards to influence the way employees and other stakeholders operate – not just at work but in their homes and communities.

This refers to the vision for stakeholder capitalism in which companies are embedded in the communities they serve. They are not separate entities where you behave sustainably at work and unsustainably at home – it has to be more of a philosophy that people live up to because otherwise we’re never going to get anywhere near where we need to go.

Listen to episode 1 of the Join the Dots podcast

Challenges vs opportunities aplenty

To make the most of the ESG opportunity, it is important not to view these standards and measures as just a compliance exercise. Standards offer us much more than that, especially as a framework for building a future-ready business.

The opportunities are huge because what we know is that right now there is a growing public interest in this area, but in a few years, and hopefully sooner, this will be central to how which we make every decision. about what we buy and who we buy it from, and for whom and with whom we work. The consequences are enormous and the consequences of non-compliance will be increasingly visible.

If we take a long-term view, it is clear that failure to consider and integrate ESG standards today will lead to more difficult and riskier activities tomorrow. We will also miss the many opportunities to innovate, collaborate and contribute to addressing key global challenges. We should see this as an opportunity not just to measure what we do, but to really do things differently and look for new ideas to deliver what we do in a more sustainable and fair way and then add more value as a business.

The impact of the pandemic

If you look at the risk report from the World Economic Forum, that tracks risk perceptions among risk experts and global leaders in business, government and civil societyinfectious diseases weren’t even in the top seven in terms of impact and likelihood for 2020. It just wasn’t really on our radar because everything we’d seen before was isolated and elsewhere – for those of us between us in the UK, certainly.

Seeing how quickly a marginal risk can become a the global crisis was a shock to the system. The scale of the impact of the pandemic and the magnitude of the risk has woken people up to the fact that all of these risks that we talk about in the ESG space have the potential to be just as big and just as impactful.

If so, we need to start thinking now about the impact we are having as a business and whether or not we are doing the right things. because bad decisions today will lead to uncertainty and risk in the future.

Risk assessment

If your business is To try to understand the impacts of particular risks, you can use a matrix with two axes – the impact on the probability, going from top to bottom on each axis. The risks you would want to focus on are those that you consider high impact and high probability. But the problem with that is that probability isn’t something we understand very well because we’re referring to our own experience to make this decision.

If you asked people in 2019 how likely a pandemic was to happen the following year, most people would say it’s very unlikely. because they had not experienced it before.

So, in an uncertain world, we need to explore new tools to understand what the future holds. There’s a really good scenario planning framework, which helps us stretch and think more connectedly. Instead of look impact on the probability, we consider the impact on uncertainty – so what you’re really measuring is that if that were to happen, what is the potential range of outcomes? If it’s a really huge range of potential outcomes, we need to try to understand it better, because it’s something that’s really unpredictable.

We used to see pandemics only as a health issue, but of course it is far more important than that: it’s a supply chain issue, a political issue and much more. A pandemic has all these unintended consequences that we didn’t anticipate as it happened. This perfectly demonstrates that we need to think more connected to all potential impacts of a high impact, high uncertainty event.

On the other hand, if the range of potential outcomes is small, we can plan and prepare for these outcomes, building business resilience. In the meantime, we are creating the ability to examine, explore and interrogate “high impact, high uncertainty” factors that might otherwise take us by surprise..

This is where ESG comes in and is really powerful, as it expands our thinking beyond just climate risk and makes us ask ourselves, what is the interplay between all these different types of issues? How do we anticipate the range of uncertainties that could potentially arise? We need a more connected approach to planning for climate change, future pandemics and beyond while doing our best to resolve the issues causing these risks.

Eleanor Winton is the founder of foresight.

Join the Dots is a collaboration between Curation and Maddyness. leftand involved or collaborate with us on your own series, email [email protected]

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