ESG (Environment–Social–Governance) looms large for organizations in 2023 (and beyond), especially in an uncertain economic and geopolitical environment. The problem facing leaders – particularly CEOs – is how to tackle ESG on an enterprise level, given its enormous complexity, and not let that complexity overwhelm the company and have paralysis set in.
The key is to take a holistic view of ESG as part of overall enterprise strategy. Leaders will need to make choices on where to focus (and not focus), especially in the near-term. No single solution exists, but over the next few blogs we will share an enterprise approach to ESG that increases the chances of success. We’ll start with a high-level look at ESG in 2023.
The 2023 ESG landscape and CEO priorities
CEOs across the globe view ESG as a growing priority for myriad reasons: employee and customer sentiment, government requirements, and new business opportunities to create value and increase efficiencies. As noted in Fortune, 70% of US CEOs surveyed by KPMG said company ESG programs benefit financial performance.
The willingness to forge ahead amidst uncertainty is alive. The Conference Board’s 2023 C-Suite Outlook Survey showed that almost half of CEOs surveyed said economic downturn and ESG backlash will not affect ESG spending in 2023. Yet CEOs worry about managing both rising costs and their ESG initiatives. One solution, noted in Fortune by Ana Paula Assis of IBM, is to leverage technology to enable sustainable operations and save money.
Benefits of embracing ESG programs
As CEOs weigh what to prioritize in ESG – whether it’s meeting SEC reporting requirements, focusing on supply chain, or any combination of actions – keeping their sights on opportunities for value creation and ESG initiatives that make sense for the business is important.
In Deloitte’s 2022 Sustainability action report, executives surveyed anticipate three main benefits of embracing ESG. This recent Forbes article summarizes them:
- Talent attraction and retention
- Increased efficiencies and ROI
- Building stronger stakeholder trust
Recognizing and communicating the opportunities ESG presents can help leaders rally others (and everyone will need to be on board) to view ESG programs as a positive.
Key Takeaways
While tackling ESG may feel like you’re David facing off against Goliath, taking a step back and looking at ESG through an enterprise lens is a key first step. Then, create an ESG strategy that fits into the overall enterprise strategy and determine a small number areas to prioritize – that connect to the business – as the first initiatives to tackle. Our next blogs will go deeper into this. If you want to discuss aligning your ESG and enterprise strategy, please send us a note at akisling@cnsqnt.com.
