If You Want to Be Sustainable, Hold Yourself Accountable
January 19, 2024
As 2024 gets underway, environmental, social and governance (“ESG”) considerations remain as relevant as ever for multinational corporations. Approaches to sustainability1 are evolving — and fast.
Since gaining significant attention in the early 2020s, corporate strategies around ESG2 and sustainability demand increasing sophistication. Companies and executives alike have affirmed their commitment to ESG in a variety of places over the years, and they must hold themselves accountable internally without losing track of external commitments and goals they have set. Amid growing and widespread scrutiny, companies are expected to substantiate their claims more than ever — both to avoid accusations of greenwashing and to build public trust. What began for some corporates as avenues for addressing highly specific environmental or social concerns have blossomed into widely watched, public and often politically influenced strategies requiring great care and attention.
One of the themes at this year’s World Economic Forum is “A Long-Term Strategy for Climate, Nature and Energy,” so we’re excited to discuss real-world examples of how multinationals can act on ESG and sustainability topics.
Operationalizing ESG and sustainability drives long-term value, and there are many ways that corporates can achieve this.3 To start, corporations need to analyze the ways in which they are incorporating ESG into transactions, collecting and managing data and engaging stakeholders, as well as the financial and carbon impacts of their investments.
Companies seeking to operationalize ESG must also ask key questions: Are you actually addressing the needs of stakeholders?4 Is your talk backed by action? Does your strategy drive long-term growth? For a mining company, fostering sustainable growth might mean recognizing that pushback against new mining permits is growing and devising a strategy that proactively engages the community and proposes nature-positive projects. For a technology company, it might involve considering the impact that transitioning to the cloud will have on data center demand and how to operate as a responsible corporate citizen amid increases in client-driven energy usage. Even targeted moves like conducting enhanced supplier5 management can help signal a concrete commitment to sustainability while strengthening operations.
At the end of the day, hundreds of topics can be relevant to a company’s ESG operations. Corporates must identify which pose the most material risks and opportunities for them and offer substantive data beyond legally required reporting6 to demonstrate their awareness of the ESG-related factors material to their business.
Luckily, we're still at the stage in the market where companies won’t be punished for adopting new and inventive approaches, as long as they are well-reasoned and genuine. Being transparent about what has and hasn't worked can be highly beneficial, as many companies are still in the process of trying to figure out how to best allocate capital for ESG and sustainability-related commitments and compliance. The more that we share information about what’s been impactful, what hasn’t and why, the better our learnings will be. Davos is a great opportunity to have this collaborative conversation.
As ESG and sustainability considerations become a cornerstone of conducting business, it’s key to adopt a sophisticated approach. One can tackle ESG from a communications angle or an operations angle, but ultimately, a combination of both will be essential to an effective strategy. With so many differing ESG reporting frameworks and the onslaught of new and proposed country-specific regulations, companies need to establish trust and demonstrate accountability by telling their authentic story and sharing the progress they are making towards their unique commitments.
1: “ESG & Sustainability.” FTI Consulting.
2: Renee Law et al. “Video: Renee Law Discusses ESG – What Gets Measured, Gets Done.” (July 2022).
3: “FTI Consulting Corporate Sustainability Report.” FTI Consulting. (October 2023).
4: Renee Law et al. “Video: Engaging With Activists To Effect Change.” FTI Consulting. (July 2022).
5: Renato Fazzone. “Impacts Revealed: Scrutinization of Suppliers to a Construction Tool Manufacturer.” FTI Consulting. (October 2023).
6: Ben Herskowitz et al. “CSRD Compliance: A Stitch in Time Will Save Nine.” FTI Consulting. (December 2023).
January 19, 2024
Senior Managing Director, Global Leader of Environmental, Social and Governance (ESG) and Sustainability
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