Radha Curpen, chair of the Greater Vancouver Board of Trade (GVBOT), writes for GVBOT on Practical Ways to Embed ESG Into a Business Strategy.
One of the sessions at the GVBOT's 2022 Energy Forum, presented by Bennett Jones on November 30, 2022, will explore the ways companies are embedding ESG principles into their core business strategy. This is something that organizations in all sectors in Vancouver and B.C. can do to build more resilient and sustainable business models as the focus on ESG continues to sharpen.
What an Embedded ESG Strategy Looks Like
Tailored: There is no 'one size fits all' approach when it comes to embedding ESG. A strategy needs to be tailored to a business and its specific needs and goals. This will vary based on a company's type of business, industry sector, investor base, supply chains, workforce, and other factors.
An important starting point for any ESG strategy is to identify the top opportunities and risks for a business, so it can focus on the ones that will have the greatest impact. This is particularly important in the early stages of developing a strategy where it may not be practical to address every ESG issue with the same level of attention. Engagement within the organization and with key stakeholders can help determine the top opportunities and risks for a business.
A tailored ESG strategy is more likely to lead to meaningful interactions with employees, partners, rights holders and other stakeholders and an overall improved ESG performance.
Sustainability and Future-Proofing: Embedded ESG strategies are ones that help sustain and future-proof a business over the long-term. Different businesses will have different areas that are the most important to them. Climate risk continues to dominate the ESG dialogue in the energy sector. Workplace issues relating to equity, diversity and inclusion and overall employee wellbeing, although relevant for all sectors, are more prominent in other areas.
An example of steps businesses can take to future-proof an ESG issue is in supply chains. Companies can make ESG factors a priority when selecting their partners, including shifting to more resilient, sustainable, legally compliant and ethical suppliers. Having sustainable supply chains is growing in importance in all industries.
Top-down and Bottom-Up: An embedded ESG strategy is both top-down and bottom-up. While the development of the ESG platform, its priorities and communications should come from the top, it should also be integrated throughout the organization so that an ESG lens can be applied to all decision making. This includes meaningful engagement with employees, partners, rights holders and other stakeholders to help embed ESG within the organization. Businesses should take a holistic approach to ESG, embedding it in their mission, vision and values, as well as making it part of their culture.
Partnerships and Industry Initiatives
Indigenous communities: Businesses are increasingly understanding, respecting and incorporating Indigenous peoples' knowledge and values in their operations. This is happening through partnership, engagement, consultation or other mechanisms. Importantly, Indigenous peoples are identifying and/or leading these efforts.
Addressing reconciliation and the changing regulatory environment is critical for businesses in B.C. A wide variety of regulatory and policy actions are underway in the province and Canada, including the implementation of the United Nations Declaration of the Rights of Indigenous Peoples.
Sector and business specific initiatives: Numerous industry associations and self-regulated bodies across Canada have launched sector-specific ESG initiatives. Some are long-standing and are regularly updated as ESG issues evolve.
The Mining Association of Canada continues to add new protocols to its Towards Sustainable Mining initiative, which it launched in 2004. Electricity Canada created the Sustainable Electricity™ program in 2009, all members must report on their sustainability performance annually.
This year, the Canadian Association of Pension Supervisory Authorities issued a draft guideline on ESG that sets out principles as guidance for pension plan administrators. I had the privilege to be part of the working group that developed the guideline.
Some companies are working in partnerships as well. Teck Resources and DLT Labs™ recently announced a pilot project that employs a variety of uses of blockchain technology to enhance the traceability and transparency of goods.
Businesses that embed ESG into their core strategies improve their ability to compete, attract capital and connect with communities, customers, suppliers and their workforce. Engaging with employees is increasingly important, as more and more are making choices about where they want to work based on a company's ESG commitments and performance.