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In September 2022, Patagonia founder Yvon Chouinard gave away his entire $3 billion company to ensure all profits would be used to fight climate change. The bold and generous decision represents a business shift to environmental, social and governance, commonly known as ESG.
What is ESG? The term refers to increasingly important corporate standards in which decision-makers look not only at the company’s balance sheet, but also at environmental, social and governance policies.
ESG advocates say this approach helps protect the planet, paves the way for more diversity in the workplace and protects fair wages.
But ESG also makes good business sense. According to PWC, 80% of consumers make sustainability-based purchasing choices, while 83% of buyers believe companies should actively shape ESG best practices.
As consumers use their dollars to support responsible businesses, business leaders are considering implementing an ESG strategy. Here are five ways.
1. Be intentional in pursuing ESG activities
Many companies do good things without an explicit focus on ESG. But consciously choosing ESG processes provides a framework for your company’s legacy.
Take a look at Patagonia. Chouinard decided to do it putting sustainability at the heart of the brand in the beginning mainly by focusing on renewable and recycled materials. Giving the company away to a climate-focused trust and non-profit organization is the capstone of that original purpose.
By consciously embracing ESG in your vision and policies, you have a compass to consistently steer your projects, strategies, materials and goals, which will increase employee and buyer confidence.
Related: 3 steps for a positive impact on the environment, society and governance (ESG).
2. Switch to electric vehicles
Think about how you get your packages. Fleets usually take your stuff from the store or warehouse to your door. Other vehicles are responsible for moving materials through the supply chain or getting employees to the office and other work events.
All of these vehicles on the road translate into a large proportion – 28% – of total greenhouse gas emissions. Using electric vehicles (EVs) is an easy way to reduce your carbon footprint, even if you can’t switch gears much else.
Light vehicles are the worst offenders and are responsible for 59% of vehicle emissions. So, if it makes sense for your business, focus on taking those vehicles out first.
Another bonus: EVs can act as mobile billboards for your business. Every time you or an employee takes a ride in a company EV, the vehicle pulls extra weight by advertising for you. That’s significantly more visible – not to mention easier to scale and reallocate – than your certified office building Leadership in Energy and Environmental Design (LEED) but has no customers who come to visit.
Related: 3 changes you should expect in transportation in 2022
3. Assess your supply chain
The supply chain connects everything from your raw materials to distribution. ESG means taking ownership of as many links as possible and asking yourself what you can do to apply it to each point.
Be transparent as you examine how inventory moves from point A to point B. Even if 81% of companies still have to supplement it supply chain visibility75% of consumers find transparency helpful in strengthening trust between customer and company.
When consumers feel that a company has betrayed that trust, they take action. 2020, 38% of Americans boycotted at least one company. Communicate whatever you’re doing to keep your business squeaky clean on your website, in your marketing emails, on your packaging, and anywhere you can display your messages.
4. Clean up your flow
Every business uses power to some degree, but the type of energy you use can have an impact on the environment. Because traditional fossil fuels like coal and petroleum contribute to global warming, companies are watching transition to cleaner energy sources, such as solar and wind energy.
Yes, clean energy can be expensive. But the cost of green electricity were already at a record low in 2019. In 2021 almost two-thirds of new renewable energy that was added was cheaper than the cheapest coal-fired power plants G20 countries.
Government support can also reduce the financial incentive. Look into tax credits available through the Build Back Better Act. You can qualify at the local, state, and federal level.
5. Bring your employees into the herd
Your team members are your best brand advocates. But they can’t share what they don’t know. Your first responsibility is to work on your culture so that people feel comfortable asking what you do in various ESG areas. Start conversations about where you are and where you would like to be.
Then get creative on how to make ESG visible in ways that are practical for your business, even outside the environmental space. To support diversity and gender equality within ESG, our company has partnered with a men-centered organization and female drivers. We also consciously ensure that half of our leadership team is made up of women, and we include female employees on panels.
Related: Why you should build sustainability into your business strategy
Customers are past the time when a good product or service was enough. Now more than ever, the marketing axiom is consumers buy from brands they trust beats. Your purpose and values count. By bringing ESG into your business, you meet people where they are and help make a lasting difference.