Business Executives and Leaders: Why Sustainability and ESG Will Remain Top of Mind for Stakeholders
For business executives and leaders, effective stakeholder engagement is paramount to achieving business objectives. This includes a company's sustainability and ESG initiatives, which will remain at the top of stakeholders' minds.
There is perhaps no place where the debate over ESG, sustainability and climate change rages as intensely as in the USA.
From Washington D.C. to local statehouses, the terms ESG (Environmental, Social, and Corporate Governance) and sustainability are under scrutiny. It mirrors the apparent chasm between the country's political blocks on sustainability and ESG. The divisive situation has had broad impacts, including for prominent financial figures like BlackRock CEO Larry Fink, who are distancing themselves from the terms to sidestep claims of being overly "woke".
Yet, as the political rhetoric heats up, there is an extensive underlying consensus that climate change is a grave threat to all aspects of society - and, by extension, all aspects of businesses, including their stock prices. Simultaneously, most stakeholders, including current and future employees, investors, and customers, continue to have ESG and sustainability at the top of their minds – including in the USA.
The situation demands business executives and leaders continue integrating ESG and sustainability in their companies and leadership. A Harvard Law School Forum on Corporate Governance study details how companies and leaders are progressing in their efforts – but also that there is much left to do.
Identify and engage your stakeholders
For business executives and leaders, embedding ESG and sustainability in stakeholder interactions has many upsides. As detailed in enteleco’s free Sustainability Stakeholder Engagement report, leaders aiming to engage stakeholders on ESG and sustainability effectively should start with identifying and understanding key stakeholders (in-house and externally).
The significance of stakeholders varies based on industry, company, and specific objectives, with customers often being pivotal externally and top management's backing crucial internally. A holistic approach is essential, recognizing that all business-connected groups, including often overlooked "invisible" stakeholders, play a vital role.
Tailored engagement, which resonates with each group's values, is vital, especially as investors increasingly prioritize sustainability metrics. Reframing sustainability from mere compliance to a core business strategy linked to profit and risk management can drive engagement further.
Addressing the gap between words and actions is essential to avoid greenwashing, emphasizing the importance of stakeholder ownership and the human element in achieving sustainability goals.
Effective coordination, anchored within the organization and facilitated by inter-departmental teams, ensures comprehensive data collection and result tracking. As the demand for sustainability professionals grows, on-the-job training emerges as a solution to talent shortages.
Leaders and executives should focus on the fact that embedding sustainability knowledge goes beyond technical insights. Value activation and mindset shifts play a pivotal role in the success of effective stakeholder engagement – and the success of sustainability and ESG initiatives.
