Every business leader that we’ve spoken to has had two reactions to the recent Patagonia announcement that they are doubling down on their “responsible business” approach by ensuring all profits are used to combat climate change.
First reaction: “Wow what an inspiring business story, and an amazing response to an existential environmental crisis!”
Second reaction: “We may have ambitious and challenging 2030 ESG goals, but our company would NEVER do anything like Patagonia’s big move!”
Even with scaled-back strategies, the issue of operationalizing ESG and hitting 2030 goals is mind-numbingly complex for leaders of global firms. And for many organizations, they’re just starting to grapple with the challenges and are struggling to pull the strategy through. Leaders don’t need the extra pressure of following the Patagonia blueprint on top of the urgency that’s required at this moment.
So, what can they do instead?
Right now, organizations are very focused on what promises they’re making externally – what they’re telling shareholders, consumers, and Wall Street. But they must shift to thinking about how to operationalize those promises down to every single function and employee that will need to change.
At Daggerwing, we’ve been working with organizations to break it all down into practical and feasible steps – causing leaders to feel less overwhelmed and more comfortable with the totality of their goals. At the end of the day, ESG is an enterprise transformation and by applying our people-centric and behavior change methods to the challenge, we’ve identified five truths about operationalizing environmental and social impact:
- There are real headwinds that threaten any organization’s environmental and social impact efforts. Inflation, supply chain disruption, rising energy costs, and the war in Ukraine are real challenges. Leaders will need to determine where they’re willing to forgo short-term gain for long-term success, and then equip their people to navigate the challenges they’ll face along the way. Otherwise, they risk the commitments falling to the bottom of everyone’s list, or worse, put off indefinitely.
- The WHY will be different for every single employee. It’s not enough to say environmental and social impact efforts are the “right” thing to do – for the business or the world. Leaders will be challenged to tell a story that makes these efforts matter to everyone, in every part of the organization.
- ESG must be a part of everyday conversations. It’s best to avoid environmental and social impact efforts becoming the “flavor of the month”, or something spotlighted only on Earth Day. This work cannot be viewed as a single campaign or initiative. The environmental and social impact must be fully integrated into the business strategy and processes, as well as the employee experience and culture.
- A ‘one size fits all’ model will not work. Employees will be uniquely impacted and will require different levels of effort. This requires a tiered approach to the change, balancing garnering everyone’s support but only requiring some to make it part of their job. For those who have a job to do, they’ll need a clear roadmap that translates ESG commitments for them and breaks down what’s expected at each stage of the journey. This work often relies on many teams achieving smaller goals that add up to a larger one.
- This work cannot be accomplished by a single team. Successful environmental and social impact efforts require many groups to come together to play their part. When this happens, clear accountability can be lacking, and teams will defer to others to take the lead. To avoid this, institute a strong governance structure to get the work done. This structure should be sponsored and led by the CEO, who needs to be the real owner and driver of these efforts and who will measure themselves against its success.
For more information on how we can help you operationalize your Environmental and Social Impact strategy, check out our ESG series on our website and a Daggerwing article recently shared by the Harvard Business Review here.