The push for a robust ESG (environmental, social, and governance) strategy has become imperative in many, if not all, business sectors.
ESG takes into account environmental, social, and operational concerns surrounding a business’s activities. It looks at all of these elements, not through the lens of public opinion but rather through the lens of business sustainability. ESG provides structure, analysis, and expectations within which businesses must operate. The importance of ESG in business has become so significant that Chief Sustainability Officers (CSOs) and Chief ESG Officers (CESGOs) have become a common presence in the C-suite.
Now that ESG is a well-established part of the corporate mindset, the question that remains is where it will go in the future. Let’s consider a few elements that will likely be on ESG leaders’ radars in the months ahead and why businesses, likely including yours, should continue to invest in this crucial area of your operations.
The State of ESG in 2023
In the past, ESG has focused on setting the stage for the future, achieving this through digitalizing benchmarking and developing mainstream ESG concepts. It has played a defensive role by addressing major areas such as sustainability and the environment. However, these efforts have often been cloaked in confusion, resulting in poor outcomes (think greenwashing).
The early stages of ESG (commonly referred to as ESG 1.0 and 2.0) are now over. ESG 3.0 will commence in 2023.
This critical third phase will require corporations to walk the walk, not just talk the talk. They will need to go on the offensive by investing considerable time and resources into proactively implementing ESG initiatives to achieve well-understood benchmarks and goals.
In practice, achieving clear goals through ESG metrics, such as PAE (potential avoided emissions) and carbon returns and time value, will require applying real data. In many cases, competent CESGOs will be necessary to manage the rollout, oversee execution, and accurately report on the progress of ESG initiatives in real-time.
Ultimately, ESG 3.0 will be defined by the tangibility of its results. In 2023, the world will watch expectantly as companies strive to genuinely and transparently invest in improving their impact.
Why Companies Should Invest in ESG in 2023
The push for ESG 3.0 is very real, but why should your company, in particular, focus on this area? What are the primary benefits that brands can garner from fully embracing the evolving ESG gospel? There are a few key areas to consider:
- Reputational enhancement: When you invest in ESG, you keep customers, employees, shareholders, and other important stakeholders happy. This grows loyalty and builds positive brand awareness.
- Innovative advantages: When you clean up the environmental, social, and governmental aspects of your organization, it naturally opens up the doors for greater creativity and innovation. You gain a competitive advantage and avoid falling behind in the endless cycle of business innovation.
- Improving operations: Creating a consistent, skeptical filter for how your organization operates and the impact that it has naturally improves your operations. This creates greater operational sustainability over the long term.
- Growing revenue: Investing in a clean, transparent, and honest operation of your business may have short-term costs. But over time, it has the potential to clean up financial performance and attract better talent, more customers, and new investors.
The urgency for and benefits of effective ESG are easy to identify. The question that lingers for many companies is if they need an official officer to oversee ESG efforts at their own company.
Hiring a CESGO for 2023 and Beyond
When considering hiring a CESGO, it’s important to consider key factors like the kind of business you run, your stakeholders, and the current makeup of your executive team.
“When considering hiring a CESGO, it’s important to consider key factors like the kind of business you run, your stakeholders, and the current makeup of your executive team.”
If you decide that hiring an ESG officer makes sense, an executive recruiter can ensure that you find a good fit. While ESG may be more structured than CSR, the position still requires a tremendous amount of nuance. A veteran recruitment team like Stanton Chase can bring the right tools, network, techniques, and experience to bear on your situation and help you find the right individual for your organization’s needs.
ESG is taking center stage this year. Whether it’s through reallocating investments, overhauling your ESG strategy, or hiring a CESGO, make sure your company is ready to manage the pressure of the limelight in the months ahead.
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About the Author
Heidi Tieslau is a Director at Stanton Chase Nashville. She is also the North American Regional Practice Leader for ESG.
Serving the industrial and consumer products and services markets, Heidi prides herself on fostering an excellent client and candidate experience through outstanding search execution and transparent communication. With decades of experience in corporate and nonprofit organizations, she understands what it takes to be an executive leader and is dedicated to translating her clients’ needs into an actionable strategy to find them the best-fit candidate.
Click here to learn more about Heidi.