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ESG Efforts Need a Purpose to Succeed

Posted on Categories Investor Communications, Purpose, SustainabilityTags

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. This is a daunting task because of the many issues each company could address. And, it’s possible that even the best of efforts are misaligned or misconstrued due to organizational realities that negate statements to the public or prevent progress on audacious goals. The best way to address these potential ESG setbacks is to start with defining purpose.

Thought leaders like Larry Fink and Harvard Business Review have agreed that an ESG effort must begin within the context of why your organization exists. Fink illuminates, “Purpose unifies management, employees, and communities. It drives ethical behavior and creates an essential check on actions that go against the best interests of stakeholders. Purpose guides culture, provides a framework for consistent decision-making, and, ultimately, helps sustain long-term financial returns for the shareholders of your company.” 

We’ve helped leadership teams devise “Focus Statements” from which to create compelling stories, make strategic decisions and measure impact. These core organizational principles include a purpose, which is supported by mission, vision, values and behaviors statements. We’ve found that while purpose is important to unite an organization, these other statements provide additional clarity around how a company contributes to a cause, what impact they want to make in the world and how every employee has to behave everyday to make purpose a lived experience in the brand and culture.

Once established, you can use your powerful and purposeful foundation to determine where to focus ESG efforts. As you identify the issues your ESG strategy will tackle, and as you draft your plan, you can measure against your purpose and other statements. Does each component of your strategy help your company achieve its purpose? Does it make sense to emphasize one ESG pillar over another? Does your vision become real through your ESG efforts? You can also assess whether or not your organization is doing what it needs to do to make ESG real. You can say you are making an ESG change, but does your culture support that statement? Do your values and behaviors contribute to successful adoption and implementation? You may need to rethink, refine, expand or discontinue your ESG ideas to ensure everything aligns.

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.

As President at Savage Brands, Bethany is known for forging powerful connections – connecting people to people and connecting companies with the fresh ideas that make their brands purposeful. In her recent book, "Get Your Head Out of Your Bottom Line and Build Your Brand on Purpose," Bethany conveys to business leaders the importance of leading with purpose.


ESG Efforts Need A Purpose To Succeed