On Leadership: Are you prepared to lead in today’s evolving ESG landscape? – Business Record

What do oil spills, workplace safety violations, failure to adopt alternative energy practices, regulatory investigations, bad corporate structure and no female directors on a board have in common? These are all factors along with a long list of others taken into consideration when looking at a companys ESG (environmental, social and governance) risk ratings.

ESG is now a watchword in the investor community, but a recent global survey by Iowa company Workiva revealed that companies worldwide feel underprepared to navigate the evolving ESG reporting landscape. Are you prepared to lead your company to success as attention on ESG increases?

Scrutiny on corporate practices is escalating. As the focus on the intersection of business, people and the planet has intensified, attention to ESG, also broadly referred to as sustainable investing, has also amplified. Shareholders are increasingly analyzing companies reporting to understand how the organizations are attending to environmental, social and governance issues. While reporting may look different in various types of organizations, addressing ESG is equally relevant for public and private companies; today, all stakeholders including customers and employees are delving into how companies are conducting business.

I wrote about why social responsibility matters to your business in a February Business Record column, pointing out that increasingly companies may lose investors, customers or workforce if they cannot demonstrate their commitment to a sustainable footprint, social responsibility or sound governance. While many boards still view ESG as an amorphous, non-core activity, it will be critical for management and directors of organizations to create comprehensive strategies that they can demonstrate publicly and authentically.

If you and your organization are not yet prepared with an ESG plan, how do you start? Dedicating talent to create, implement and oversee strategy is a logical first step. According to Workivas study, 68% of organizations globally have put in place specific roles to oversee ESG reporting and initiatives. A report by the National Association of Corporate Directors emphasizes that defining board governance roles to oversee ESG is also critical for organizations. However, where ESG lives in the enterprise varies in both management and board structures as companies seek to organize this work.

I turned to several leaders in ESG at top Iowa companies and asked: Why do organizations need to put in place specific roles to oversee ESG reporting and initiatives?

Jane Keairns, director, ESG and emerging strategies, Principal Financial Group: Organizations across the globe face a common set of opportunities in their sustainability efforts: determining which material issues to focus on; integrating sustainability into business practices; setting appropriate goals/targets for their organization; and telling their sustainability story amid a complex set of ESG regulations, reporting frameworks and ranking agencies. Having dedicated resources can galvanize a companys efforts, enhance its ability to address both environmental and social impacts connected to the business, and signal the importance of sustainability to employees and external audiences.

Mandi McReynolds, global head of environment, social and governance, Workiva: ESG is a bedrock of modern business strategy. We have seen growth in executive ESG roles and over 7,000 different ESG jobs posted on LinkedIn last year. It is important to have oversight into the various stakeholder demands, the business value drivers, and level of transparency needed to address regulation, investors, customers and employee expectations. The most effective to drive business value forward have been individuals who have had experience working with the board of directors and can collaborate across executive teams. Often companies are blending the right talent, teachers (consultants/academia) and technology to drive the impact of ESG.

Barbara Tormaschy, senior vice president of sustainability and regulatory strategy, Alliant Energy: Alliant Energys ESG goals apply to a wide variety of the companys operations and take teamwork by all employees to achieve. Due to the broad range of these initiatives and the collaboration needed across the company, we have identified specific roles that reinforce our commitment to the goals, align our strategy and maintain appropriate oversight from our management and board of directors. This team also ensures transparency on our progress to our customers, communities, employees and shareholders. Responsibility to our customers and the communities we serve is at the heart of everything we do.

Georgia Van Gundy, executive vice president, chief administrative officer, chief customer officer, Hy-Vee Inc.: Companies and organizations are focused more on purpose today than ever. There are opportunities through an organization to make an impact on ESG goals. It is important to have a person thinking about strategy, driving change and measuring results for ESG on a daily basis. It takes a coordinated effort among many business units to maximize. At Hy-Vee, we are continually evaluating and measuring our efforts to see where were making strides and where we need to improve. Measurement is the key to driving results.

Leaders advice on shaping your ESG strategy:

Develop a cross-functional team. Van Gundy advises that it is important to have buy-in throughout the company or organization when developing and implementing ESG strategies. The first step is to have a cross-functional team work together to shape your ESG plan, she says, adding that it is critical to set clear, intentional and measurable goals. This will enable you to develop accountability, measure impact and tell your story, says Van Gundy.

Set a strong governance structure for strategy development. The best companies who unlock the most business value with ESG are those who have an internal and/or external ESG advisory/taskforce reporting into the executive team and board of directors, says McReynolds. She points out that organizations need the voices of finance, the ESG team, operations, investor relations and product groups around the table discussing what is most material to the business, what business value the company is driving together, and debating a path forward. McReynolds notes: It is critical to recognize ESG as a team sport.

Begin with small steps. The ESG journey can be an overwhelming one, especially for a complex global company, so its important to acknowledge that every step toward more sustainable practices is a movement in the right direction, says Keairns, pointing out that once you can embed those practices into business as usual, progress will continue to accelerate. She adds: Progress over perfection is a mantra our team tries to embrace.

Start with the customer. Alliant Energys ESG strategy takes into consideration their stakeholders and what they expect from the company as a corporate citizen.?Our purpose is to serve customers and build stronger communities, says Tormaschy, adding that at Alliant Energy it was critical to start with the customer first and keep their perspectives at the forefront as they advance their ESG goals.?

Use feedback from stakeholders. Keairns advises organizations to use feedback from their key stakeholders to determine which sustainability topics are most material to the business. She recommends that your team listen for requests to address related issues facing society and the planet, with special attention to those issues related to your organization and its business and then assess the biggest opportunities for impact. She says, Start small and prepare yourself for full or even radical transparency, related to the starting point, long-term goals and progress against those goals.

Prioritize stakeholders. It is important to recognize the rapid pace of ESG and the difference between shareholders and stakeholders, says Reynolds, who points out the interests of these groups can conflict at times, having a serious impact on the business. Board, executives and your ESG taskforce need to be preparing and working through moments when investors may conflict with employees perspective or future customers or suppliers may not be ready to meet the demand another stakeholder desires, says Reynolds, Without navigating stakeholder prioritization, companies will be left tossing and turning in the wave of requests and the level of transparency consistency.

Create a transparent scorecard. Tormaschy says that to demonstrate their commitment to governance, Alliant Energy has created a transparent and ongoing accountability through a Corporate Scorecard.?This scorecard includes ESG metrics for carbon emission reductions, energy reliability, customer experience and workforce diversity.?These ESG targets and milestones are part of each employees annual performance expectations, from the CEO to individual contributors. We believe this helps all our employees understand the importance of and help drive improvements in our ESG performance, says Tormaschy. These metrics are articulated from the very top.

Create partnerships. Leveraging new and existing partnerships is another resource organizations should consider using when building out their ESG strategy. At Hy-Vee, we believe we can make an even greater impact by partnering with others and combining resources to work toward a common goal, says Van Gundy. She notes that Hy-Vee often partners with others on initiatives such as tree planting, meal packaging and food giveaways, which can help those organizations maximize their impact by reaching underserved populations, supporting families in need and promoting racial unity and equality.

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On Leadership: Are you prepared to lead in today's evolving ESG landscape? - Business Record