Onto ESG, where is the action? - Datalitiks

Onto ESG, where is the action?

While there are clear targets and objectives when it comes to sustainable development goals, how organizations are contributing to that bigger picture?

More and more organizations have started putting sustainability at the heart of their purpose, with the ambition of building a better world. While ambition and goodwill are there, it seems that there is a huge gap in this being translated into the actions, to generate that desired impact. Moving from a business model purely focused on achieving financial outcomes to embedding in its sustainability consciousness, it’s not easy, making it difficult to scale up any sustainability programs.

Micro perspective – moving from SDG to ESG

The bigger picture in sustainable development is being led by international institutions, with a clear roadmap and set of ambitions to be achieved by 2030. Unless those are being translated and adopted in a standardized way for organizations, there is not going to be a common direction by taking the right action and creating the needed impact.

The perfect storm has been brewing over the past two years: acceleration of climate change, going through a pandemic, the current geopolitical conflicts, and the rising inequality- especially, within countries. To navigate through this, with the best intentions, economies and organizations have started launching all kinds of sustainability initiatives at an unprecedented pace.

Good intentions, in the paper. But where is the greater action?

While the goodwill and ambition are there, those sustainability initiatives fail to scale in most cases, not resulting in the desired action. In the end, this gap between gap and action results in a round of frustrations by customers and stakeholders, hindering credibility and adding pressure to organizations.

Let us take the example of sustainability reporting. The aim of the exercise? Report on impacts of the organization, and what is being done to mitigate the negatives, and boost the positives. The result? A press conference, showcasing a 200-page report – that hardly anyone reads (unless you are really into it)-. Where is the greater action that is required? For most organizations, this has become the end goal. When truly this should be the start.

Having said that, it is still an impressive target if an organization goes through that exercise, knowing how costly that can be. This would explain, how challenging it can be for small countries to adopt those ESG best practices.

EU 27 ranked by size (GDP) and several reporting provisions per country
EU 27 ranked by size (GDP) and several reporting provisions per country,Carrots and Sticks 2020 June

The hidden enemies pushing back action on sustainability

Changing the business model of organizations and adopting a more conscious sustainability mindset is not something easy. Change is never easy, especially if it creates disruption in the old ways of functioning for all stakeholders involved: the organizations, consumers, and stakeholders.

Moving from ambition to action, it might be a huge challenge. And if not given the right importance, it just can put on hold all your good intentions in building a better world.

In the article ‘How Sustainability Efforts Fall Appart’ in Harvard Business Review, the authors highlight four main factors that make it so difficult for organizations to move into that desired action.

  1. Structure and governance. Organizations are still with the mindset that sustainability has to remain in a particular department – sometimes falling into the old concept of CSR-. Obviously, this makes sustainability a nice-to-have, led by one department, not generating the needed traction to create the desired impact. Not to say, that – although there has been an improvement- there is still a lot to learn from boards and key stakeholders on the repercussions of putting sustainability at the heart of their business strategy.
  2. Process and metrics. If the way of measuring businesses still is using the old approach of reporting revenues, costs, and market shares… where does sustainability fit in the picture? If organizations, keep that traditional thinking of measuring performance, sustainability will remain in second place. And if you cannot measure properly what really matters to your organization, how are you going to determine if you are heading in the right decision, and creating the right impact towards building a better future?
  3. Culture and leadership. To put sustainability at the heart of the purpose of the organization, a deep transformation is required. And this is one of the biggest challenges, as it requires moving your organization from the standard ways of operating and changing people’s minds and hearts. That can only happen when this is triggered by the leaders of the organization.
  4. Methods and skills. Our breed of leadership has been raised with methodologies that did not consider the sustainability dimension. Creating a bias in management. While over the past year, there has been a profound change in methods -taking into account that dimension- if not adopted by a wide audience, little impact will happen.

Rome -and the world- was not built in a day: Collaborate and conquer

The challenges mentioned previously add another layer of pressure to the agenda of the United Nations toward achieving sustainable development goals by 2030. Change in mindset, and adoption of new ways of doing things might be a slow process.

What is clear, is that adopting sustainability as a way of building better economies, societies, and environment needs to break the ways organizations and economies have been operating until now. This is not longer a race to who gets more market share or gets more revenues, this is how we can build a better future by revising the current practices we have towards people and the planet. To do so, there is some action that needs to be taken, if you truly want to move from ambition to action, when it comes to sustainability:

Change is never easy, adopting new ways of thinking and operating for organizations and stakeholders to move towards sustainability is a challenge. At the end, it is about taking the step to closing the gap between ambition and action, by being aware of some of the issues that will be needed to overcome and contribute to positive change -not only in paper.