The ESG execution challenge: Moving beyond ideals

Environmental, Social, and Governance (ESG) initiatives have surged to the forefront of corporate agendas, driven by the imperative for sustainable practices.

However, the challenge lies not in identifying purposeful ESG goals, but rather in executing the ESG strategy effectively.

“We don’t have a problem with purpose; we have a problem with execution,” notes Ragne Maasel, Group Head of ESG at LHV, an Estonian-headquartered bank.

“The fundamental misconception with ESG is that it is an ideological issue; that it is about doing good.”

Kwasi Mitchell, chief purpose and DEI officer at Deloitte, agrees: “What I think is problematic is that we’ve become engaged in this dialogue around ESG that has become politicized.”

The balance between purpose and pragmatism

The importance of purpose and impact cannot be understated when discussing ESG; however, Maasel cautioned that solely focusing on purpose won’t induce change in business processes.

“If you want to change processes, talking about ideology and purpose is not going to be successful when I want key leaders to change the way in which they make business decisions.”

Kieren Mayers, Senior Director of ESG at Sony Interactive Entertainment, echoes that a focus on process is key.

He notes: “It’s important to focus on changing processes and practices and hearts and minds to actually have tangible change; to turn your intentions into action and not necessarily listen to the mainstream opinion of what ESG should do.”

Indeed, companies that stay in the land of lofty purpose statements but fail to take real steps toward change risk becoming obsolete.

“If companies don’t make the shift into actually being more sustainable, then they won’t survive,” says LHV’s Maasel.

Setting your ESG policy

“ESG itself is very complex and challenging. And then each company is unique, so there’s not a ‘one-size-fits-all’ approach. But we need to make sure we’re doing the right things, and doing them well,” adds Sony Interactive Entertainment’s Mayers.

Deloitte looks at the question of what to focus on in a similar way to Sony Interactive Entertainment.

“It’s about shared values,” states Mitchell. “It’s important to focus on where you can have a material impact on society.”

Therefore, Deloitte asks themselves what they are good at and what they can distinctly offer.

One place where Deloitte excels in this is in their hiring practices.

“We look at how we can open up pathways for people to enter into a professional services career that historically wouldn’t have been able to do so.

“So, rather than us recruiting from Ivy League schools, we’ve had to think about pivoting our hiring strategy to include those without four-year degrees, or those who would have traditionally been left behind.”

LHV takes a very pragmatic approach. “It begins with the internal capacity that you have within your organization,” says Maasel.

Then, it’s about defining the core of your ambition. “What are you aiming for? Is it just compliance? Is it having a positive impact? Survival in the long-term? A competitive advantage?”

Bringing your people along on your ESG journey

Inspiring your people to get behind your ESG strategy and start making small changes requires talking in a language that they understand.

“If you think about ESG itself, it’s such a diverse range of topics that people struggle to truly get their heads around it,” notes Mitchell from Deloitte.

“We need to grant some latitude for people as we take them along this journey on some very complex topics that are challenging to deal with.”

And you have to be good with people, explains Maasel. “Ultimately, you’re changing the organizational culture through the behavior of your people and especially top managers.”

Mayers agrees that tackling the complexity of ESG is vital to bringing people along.

“You’ve got to break it down for your people and remove the scientific detail. One way we do this at Sony Interactive Entertainment is by setting a mission that clearly explains our approach.”

Reporting back on your actions in a timely manner is important, too.

“People aren’t going to wait ten years for you to tell them what a good job you’re doing. People need to know and see progress monthly to win hearts and minds,” says Mitchell.

“You’ve got to follow through on your convictions,” adds Mayers. “We’re transparent and communicate where we are, where we’ve done well, and where we need to improve.”

Be honest about where you’re at.

“Don’t talk about large goals like you’re going to be Net Zero in ten years — that’s greenwashing,” says Maasel. “Instead, show the small, uncomfortable steps that show you’re making good progress.”

Become a futurist

Successful ESG implementation requires one to live in the future to some extent.

“Your ability to anticipate the future is key to setting you apart — but many people don’t have this ability, or do it poorly,” says LHV’s Maasel.

“But if you can live in the future, you can anticipate the things you have to do today.”

What makes this futuristic viewpoint challenging is the large timescales at play.

“It’s much easier to predict the next two or three years than it is the next 20 years,” says Mayers.

But that doesn’t stop Sony Interactive Entertainment from trying.

“My teams and I look forward to that future and we ask, ‘How will things look when we’ve solved the problems?’ That’s the metric for us, and we work backwards step-by-step.”

By adopting a futuristic perspective, companies can deduce the steps they must take today to thrive tomorrow.

ESG’s human-centered approach

ESG demands commitment, transparency, and genuine action. As these experts attest, it’s about integrating values into daily operations and nurturing a future-focused mindset.

ESG’s success is contingent on aligning actions with aspirations, embracing change, and fostering a sense of collective purpose.

“Employees care about their legacy,” concludes Mayers. “They can envisage the future and they feel compelled to focus on what they can do. And that’s always a good place to start.