3 change management tactics for ESG integration
Environmental, Social & Governance (ESG) offers a framework for companies to take a more agile and proactive approach to meeting stakeholder expectations and addressing risks in a VUCA (Volatile, Uncertain, Complex and Ambiguous) world. When done right, ESG can create new growth opportunities, strengthen business alliances, and reduce inefficiencies. However, companies must take an integrated approach — by embedding ESG principles within the company culture, operations, and business model — in order to see meaningful results. Companies that approach ESG reactively are unlikely to see financial value from their program.
Taking ESG from a compliance exercise to an integrated, value-generating program involves the active contributions and adaptation of people throughout the company. For example, an effective ESG program relies on the finance team to provide data assurance and controls, the legal team to develop a governance structure and ensure the ESG strategy includes regulatory concerns, the procurement team to embed ESG principles throughout the supply chain, etc. Integrating ESG within the systems, responsibilities, and mindsets of team members throughout the company requires a robust change management process.
Change management
Change management is a set of strategies employed to guide organizations through the process of transitioning from one state to another. The Kotter approach to change management focuses on securing political will throughout the organization and addressing common barriers in the change management process, following these 8 steps:
Create a sense of urgency
Form a powerful coalition
Develop a vision and strategy
Communicate the vision
Empower action by removing obstacles and building skills
Generate short-term wins
Consolidate gains and produce more change
Anchor the change in corporate culture
This blog will go through 3 of the change management tactics and how they can be applied to the ESG integration process.
Engender a “get to do” mindset
Fostering enthusiasm, connection, and ownership begins with developing a compelling vision around the change ESG will create for the company and its stakeholders. Developing a messaging architecture around ESG is so important that I recommend companies align on a high-level vision before doing anything else. Having a cohesive vision focuses the ESG strategy and aligns stakeholders around the program’s unique perspective and rationale.
Your ESG vision should be:
Developed collaboratively
Developing the vision collaboratively with C-suite and team managers ensures strategic alignment, fosters buy-in, and ensures the vision is grounded authentically in corporate values and culture. The vision should be inspirational and broad enough that each individual team can apply it to their work.
Convey a sense of urgency
Grounding the vision in the immediate risks and opportunities around ESG integration creates the sense of urgency required to motivate employees to take action. Highlighting the dangers of inaction as well as case studies of how competing companies have adopted ESG strategies are helpful tactics to achieve this goal.
Shared frequently
For employees to believe that a given initiative is a priority, leaders should share it 3 times more than they need to. Being intentional about the timing of your program launch and/or aligning it with other important initiatives can help ensure your ESG program gets enough exposure.
Empower volunteer advocates with a strategy network
A strategy network is a change management tactic that breaks down hierarchical boundaries and fosters collaboration by engaging a group of cross-functional volunteers to drive initiatives forward.
Here’s how it works:
Enlist volunteers by using the ESG vision to attract team members from throughout the organization to apply to join the strategy network.
The strategy network is broad and collaborative – it’s allowed to work independently but is supported and overseen by the ESG committee or team.
Network members help secure buy-in within teams, identify and address barriers that their teams may be experiencing, solve problems, and advocate for ESG initiatives much more effectively than a formal structure.
A strategy network is especially effective at executing a specific initiative that requires company-wide support, like putting a new policy in place or integrating a new technology solution.
Quick wins
ESG integration is a long-term journey, and can take years to take root. However, it's essential to tangibly demonstrate progress early on in order to show stakeholders that the effort is creating traction. This helps secure additional support and resources from leadership. Don’t bet on these quick wins materializing after you begin your journey. Plan ahead for they’ll be, and how you’ll celebrate them with the greater community. Some examples of quick wins include:
completing a training around an ESG focus area or initiative
developing or updating a company policy, or
piloting a larger initiative with a small team of early adopters.
Featuring initiative pilots or case studies are also great tactics for creating social proof and making your ESG program feel more tangible to team members.
Conclusion
ESG integration is a complex, challenging process that requires thoughtful change management. By developing an inclusive vision for the change you want to create, empowering folks across the company to play a meaningful role, and celebrating successes early and often, you can help foster the ESG mindset shift to uncover exciting innovation opportunities. However, a change management process is only as effective as the strategy you are working to enact. Check out our webinar ESG for SMBs for an overview of the 6-step ESG strategy development process that Actera uses with clients.
