Beyond compliance: How to pick winning ESG strategies that make a splash

Gone are the days when ESG was advanced from within by a band of social advocates braving the current of traditional business thinking. ESG has penetrated our collective psyche and entered the business bloodstream. In many organizations, it informs every strategy, every activity, and many executives are now expected to craft plans as to how their domains will advance it. CIOs are no exception.

In crafting yours, you face a choice about the type of ESG leader you’ll be. Typically, we see two personas. We call the first the “Ops Maven;” the second, the “Community Champion.” The former tends to focus on internal efficiencies—cutting waste, stemming emissions, and the like; the latter, on improving the health, wealth, and wisdom of the community outside the company grounds.

The ideal is to embody both personas. Both are vital to ESG in the way that both costs and revenues are vital to profit. Yet it’s understandable why many executives gravitate toward that of the Community Champion: Everyone wants to drive an initiative they can point to evidence of in the real world and say, “I did that.” Many of our clients want the same.

If you, too, seek to embody the Community Champion, start by figuring out what initiative you’ll undertake. Choose wisely. Probably, you’ll have to stick with it for years and motivate others to help you drive it. You might also consider each of the following as you brainstorm.

Partnerships. ESG is an act of collaboration—among governments and peoples, businesses and ecosystems. So why go at it alone? Of the most inspiring initiatives we’ve seen, almost all call on some partnership. Sometimes that partnership is significant but singular, such as the one between Johnson Controls and Harris County, which will see emissions at Houston’s NRG Park cut by forty percent by 2030. In other cases, the partnership is one of many small partnerships. Such has been the case in the The American Connection project, in which hundreds of companies, convened by Land O Lakes, are working to bring Wi-Fi to rural America. Consider your own partners. Could you embark on some ESG initiative together? What about with your city, your county, your state?

Think “circular.” Circular economies are especially impactful, in part because they draw on the virtues of both Mavens and Champions. A circular economy is, technically, “a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible.” But think of it as using waste to create something new, often something different. SmartWool, for example, uses recycled socks (not just theirs) to make dog beds. Of course, it could approximate your core products, too. Kohler sells collections made entirely from recycled materials—a model conceived in its incubation unit, WasteLab.

Play to your strengths. Don’t fixate, too soon, on specific ESG criteria. You’ll restrict your thinking. Instead, consider freely how your company’s expertise might serve your community. What issues do you care about? What problems haunt you? Be precise. Be personal. The more precisely and concretely you can define the issue, the more creative the solutions you’ll think of. Don’t say, “the environment.” Say, “The nature preserve across town, where people have been dumping trash for years.” How can your company thwart the dumping? And would thwarting it serve your company’s vision? Its purpose? Its strategy?

Choose among many ideas. If you have many ideas, you might identify a winner simply by calling for a vote among your employees. At the very least, you’ll see what your employees don’t care about: equally critical data. Rank the remaining ideas against two other dimensions: your company’s enterprise goals, strategic or ESG, and any additional criteria you would like to fulfill, such as Commercial viability, Waste Reduction, Partnership, or Brand Impact. See what themes emerge.

Finally, inspire. When you take these considerations together, you see how vital inspiration is, an observation corroborated by even cursory research: Thirty-four percent of Gen Zers would take a pay cut to work for a company whose ESG strategies align with their values. Forty-five percent would accept less work-life balance. For Millennials, the numbers are thirty-nine and forty-three percent, respectively.

We live to be inspired, and in the long run it may be our ability to inspire others that makes the biggest difference, quantifiable or not. Not only does that quality set apart leaders from their peers, perhaps launch them to the c-suite; it transcends industry, winning not just awards but hearts, and elevates us all to a healthier existence.