ESG Efforts Need a Purpose to Succeed

Sustainable investing and shareholder activism set new expectations for companies in society.

Stakeholders are pushing organizations to make environmental, social and corporate governance (ESG) changes to solve our most looming collective challenges. To truly make an impact and engage stakeholders in these ESG efforts, it’s important to have the right foundation in place. If you don’t start with the right foundation, it doesn’t matter what else you do — your ESG efforts may feel misaligned or unintentional to those interested in them. Purpose is the ideal foundation for guiding your organization, and for making the most of your ESG programming.

Purpose is the deeper “why” of an organization. It is the overarching corporate imperative used to make and guide all decisions and storytelling. When purpose is in its right place at the core of organizational leadership, ESG efforts fall in line as a support of that noble intention. Any ESG action or goal becomes a demonstration of your commitment to your purpose, showing that you truly believe in your purpose and are doing all you can to make it real in the world. With this link between the organizational purpose and ESG efforts, you can determine where to focus ESG efforts, how to put ESG efforts into a larger organizational context and how to galvanize your culture in support of ESG success.

Determine Where to Focus ESG Efforts

Many ESG programs today look and feel the same — they aren’t rooted into any greater purpose and can feel scatter-shot – aiming to achieve many imperatives at once. Using purpose as your guide, you can create an ESG strategy that is truly your own. First, look at your purpose, and think of all the ways your ESG program could contribute to making that purpose real in the world. Ask yourself: Does each component of our strategy help our company achieve its purpose? Does it make sense to emphasize one ESG pillar over another in support of that purpose? Ultimately, purpose should be the guiding force for setting ESG strategy and making ESG decisions, helping you realize where you can make the most impact on the world by nature of what you care about most. Purpose becomes a great tool for helping you sort through the things you could do for ESG into the things you must do to contribute to that deeper cause you are operating in support of.

Contextualize Your ESG Decisions

When you are ready to communicate your ESG intentions with the world, purpose can help you contextualize the story. If your purpose is the guiding force of your organization, you can tell stories about why you are making ESG decisions in support of that ultimate purpose. This continues to shape the narrative of your organization in a cohesive way. Rather than ESG being a separate story, or a separate part of your organization, it is integrated into the fabric of where you are headed. This resonates with all stakeholders who have been following your story all along, and helps you develop deeper levels of trust and credibility with these groups. 

Galvanize Your Culture 

Purpose provides a tool for energizing employees in support of ESG efforts and beyond. When employees can see that ESG is a part of making your broader purpose real in the world, they will feel more deeply attached to your intentions. And with purpose as the ultimate motivator, each person will feel part of something bigger than themselves and will want to contribute their best and highest every day. When everyone is working together, and for the same purpose, there is a deep sense of belonging. Your culture is instilled with energy and vibrance in the pursuit of all its goals including ESG. 

All efforts, including ESG, should support the enlivening of your purpose. ESG can’t just be a “check-the-box” effort or a singular report. Otherwise you run into issues like misalignment between words and deeds or a scatter-shot approach that won’t make a real impact. When an ESG transformation is part of who you are, how you show up and what you stand for, it is easier for you to mobilize internal support, to gain the credibility, reputation, and differentiation you seek, and to build trust with all those counting on you to make a change.

Editor’s Note: This post was originally published on June 22, 2020 and has been updated for comprehensiveness.