Nicole L. Rudner
Nicole L. Rudner is director of practice groups and industry sector teams at TerraLex based in Miami Lakes, Florida.
A commitment to environmental, social and governance principles isn’t just the right thing to do, it is good business practice. Find out why you need to have a formal ESG plan in place to benefit your organization and its members.
ESG—which stands for environmental, social, and governance—refers to the three key factors when measuring the sustainability and ethical impact of an investment in a business or other organization, according to Market Business News.
While the concept can be traced back to the 1960s, recent years have brought the framework to the forefront for many organizations and businesses and expanded it beyond the realm of corporate social responsibility. If ESG isn’t top of mind for your industry, get ready. It’s coming.
Consumers, regulators, and policymakers have all taken notice of ESG. According to a McKinsey podcast in 2020 on the subject, “If you take the U.S. as an example, about a quarter of the assets under management, or roughly $12 trillion, are ESG-rated investments.”
If ESG isn’t top of mind for your industry, get ready. It’s coming.
With the intense global focus on ESG, it is important to be prepared to handle inquiries from your members and other stakeholders on how ESG fits into your mission and strategy. While it requires a strong look at your business operations, it can also be a meaningful resource for your members. Here are three ways your association can be ESG-minded:
Create an ESG plan for your organization. You can start small, but you need to start. You cannot expect your members to make this a priority if your organization does not as well. This might mean being more mindful of the carbon footprint created by team member travel and finding ways to offset it. It could also be developing employee resource groups (ERGs) where your members can collectively share and discuss challenges and opportunities related to social matters. From a governance perspective, you’ll want your board, and consequently your members’ leadership, to have solid policies in place to ensure responsible decision-making with sustainability in mind.
But no matter how it manifests for your organization, you need to create a formal ESG plan that is woven into the fabric of your organization. Everyone should understand what you are trying to do and why you are doing it.
Educate your members. You can add value for your members by preparing them for the types of ESG-related questions they may get from their own clients, customers, and other industry professionals. Whether your members are just getting acquainted with ESG principles or are experienced with them, provide resources, training, and opportunities for idea exchange.
Depending on the nature of your organization, you may want to set benchmarks for your members to meet in relation to specific ESG metrics. In this scenario, you’ll want to be flexible to each member’s current ESG focus. The most important thing is that everyone feels supported in these matters regardless of where they are currently on the ESG continuum.
Measure your progress and promote it. It is true—what is measured is managed. Set up metrics to track your organization’s progress toward ESG goals. This is also an opportunity to engage members (either as subject matter experts or volunteers) to identify and develop similar metrics they can use in their individual and collective business dealings.
Any major change to how you do business can seem daunting. The key is to strategically adapt at the pace that makes sense for your organization and your members. By incorporating ESG into your strategy and educating your team and members on the importance of it, you can build it into the foundation of your organization by selecting the aspects of it that are in line with your purpose and culture. Everyone can make decisions that are more environmentally, socially, and governance friendly because ESG is beneficial for everyone.