For merchants and brands looking to strengthen their environmental, social, and corporate governance (ESG) practices, there’s no “plug and play” solution. Companies need to fully assess their business and reset it in a responsible way – taking a holistic, top-down approach to implementing an ESG strategy, and putting the elements of purpose, diversity and sustainability at the core.
Here, and in the video link below, Jill Standish, Senior Managing Director & Global Lead of Retail at Accenture, shares insights into how ESG is evolving into a “management approach,” what retailers need to consider when resetting and deploying a strategy, and why sustainable practices are needed now more than ever.
FMG: When considering developing a sustainability strategy, where should retailers and brands start?
Jill Standish: First is an assessment. Leaders need to answer this question: Where are the impacts along the value chain of your business?
By understanding your impacts, you can reset and assess where there are quick wins – both environmentally and socially, but also financially. We estimate that 50 to 60 percent of ESG improvements are either cost-neutral or cost reducing, so the reconciliation of targets versus expenses is a natural and motivating starting point.
FMG: Why should merchants and brands consider more of a 360-degree approach to sustainability? And what would that entail?
J.S.: Sustainability’s next chapter is the evolution of ESG as a management approach. Businesses should no longer simply hope to mitigate negative impacts, but actually manage their growth, profit and resiliency through the lens of ESG and its opportunity.
It’s also a team sport, and every department in the company has a role to play, and each should be supported and empowered in delivering their respective targets. It is still a holistic approach, but is divided into individual goals, and integrated into every element of the company.
FMG: When it comes to deploying ESG initiatives, what investments are needed?
J.S.: We recommend a portfolio approach to mitigate the notion that this is based principally on expense and budget sizing. In many ways, these efforts drive cost reduction, while providing operating and process efficiencies that drive savings as well as impact improvement, by essentially funding the elements that may require additional investments.
This includes areas such as raw material improvements and swaps, along with investing in technology stacks that facilitate the tracking, collection and reporting of data.
FMG: How do you measure success of ESG efforts?
J.S.: Technically speaking, you reach success by achieving targets that are aligned to well-vetted frameworks such as the Sustainable Accounting Standards Board (SASB). These include concrete, data-driven, brand-aligned ESG KPIs that investors are now demanding.
Within the larger context of industry stakeholders, success is measured in increased consumer loyalty, employee satisfaction, risk reduction across the enterprise, increased growth and profitability, and investor confidence that can lead to improved valuation.