Does your small or medium-sized business have a clear set of environmental, social and governance (ESG) policies in place? Do you have a way of communicating your ESG practices to your customers, partners and stakeholders? If not, now is the time to put a plan in place.
The fact is, many small business owners and managers perceive ESG issues as the domain of large, publicly traded corporations. After all, investors are increasingly making decisions based on research and scoring that rates a public company’s track record on these critical issues.
But for smaller companies, clearly-defined ESG practices are just as important. Consider this:
– Environmental: Strongly committing to sustainability is not only the right thing to do, it will engage your employees and help attract new talent. It will also boost your standing with potential business partners and, critically, with your customers.
– Social: Developing criteria for how your company interacts with employees, prevents discrimination, communicates with customers, suppliers and the community as a whole will improve your operations and allow you to run your business more efficiently.
– Governance: Implementing a clear policy regarding financial management and oversight, salaries, and business objectives will help your organization maintain focus, while building trust with your employees, customers – as well as any investors and partners.
Let’s take a closer look at what your company can do to set and communicate clear ESG objectives:
Set Sustainability Goals
Businesses of all sizes have a critical role to play in reducing emissions and waste. And consumers are increasingly demanding that the companies they buy from prove their commitment to sustainability, and more generally to important social causes. A recent study by IBM and the National Retail Federation found that 70% of consumers in the U.S. and Canada believe that brands should be sustainable or eco-friendly.
Ultimately, your sustainability goals will depend upon the nature of your business and the size of your organization. After a careful examination of your company’s internal use of resources, from the paper and plastic products you purchase to the energy your business consumes, you should set clear goals for reduction, and system to assess and report on your progress. You should then also examine your supply chain and commit to partnering with manufacturers, suppliers and logistics experts who are also prioritizing – and verifying – sustainable practices.
At DHL, we have embedded sustainability into the fabric of our operations as part of our ESG initiatives. Our commitment to forging green supply chain solutions is decades in the making, and our aggressive Zero Emissions by 2050 goal is an example of using science-based targets in pursuit of a zero emissions economy. For your company, emissions reduction may involve retrofitting the lighting in your office building, changing your vehicle fleet, or modifying the way that you purchase energy for your facilities. DHL has created specific targets to reach our emissions goal. For instance, we have implemented new warehousing technologies, and launched electric vehicle and electric cargo bike programs.
Understand What Social Means, and Take Action
The “social” part of your ESG plan involves the way your company relates to your employees, your customers, stakeholders, and the larger community. What specific programs can you implement, for instance, to engage and reward employees, ensure positive workplace conditions, and prevent discrimination? What steps can you take to create better relationships with your customers, and to protect their privacy? How can you support, financially and through volunteer efforts, local community improvement projects? Answering these questions will start you on the way to developing your social goals.
Our parent company Deutsche Post DHL is the world’s 11th largest private employer, with more than 570,000 employees in over 220 countries and territories, and so we understand how important it is to create a strong, inclusive and rewarding workplace. We’ve made employee engagement a top priority at DHL, establishing programs that recognize our teams while giving them the support and tools they need to succeed. We have systems in place to verify that our efforts are working, and have set a goal of maintaining an 80% or higher employee engagement score – a goal we regularly exceed. We have prioritized safety, established and met employee and leadership diversity goals, and made human rights a top company issue.
But even if your organization only employs a handful of people, the same principles apply. Among other elements, your ESG practices should include employee engagement initiatives, protections for your workforce, efforts to improve diversity, and programs to protect the privacy of your customers and employees. Not only will you boost employee and customer satisfaction, but you will also be well-positioned to attract the best talent in your industry.
Develop Good Governance Strategies
You already know that the financial performance of your company is directly linked to management and oversight practices. By setting clear policies regarding bookkeeping and auditing, and creating transparency in your processes, you are not only improving performance, but you are also strengthening your ability to create partnerships and recruit investors. And, you are building confidence and trust among your employees and customers.
When it comes to good governance, then, it is critical that your company has specific standards in place regarding executive pay, bonuses, and financial oversight. At DHL, we have implemented a clear Code of Conduct for all management processes; we ensure compliance through audits; and we have a system for monitoring governance among our suppliers.
What is your company’s approach to ESG? Let us know on Twitter @DHLUS.