Energizing ESG Performance: Action Steps to Advance Your Agenda — Velma Deleveaux, PhD
“ESG,” short for environmental, social, and governance, is front and center for shareholders seeking to invest in the greater good. A 2021 EY report indicated that 39 percent of investors currently have a stake in ESG products — an increase from 33 percent in 2020. A lack of focus on ESG can in fact be a deterrent for investment; one in five investors say they decided not to invest with a manager because of inadequate ESG policies.
But today, measuring ESG return is moving beyond shareholder value to include the broader realm of stakeholder value. More and more companies are seeking to enhance stakeholder value by balancing economic development with social good, including the potential for long-term return on investment for their shareholders through building relationships in the community.
In a previous article, I noted how expanding the benefits of clean energy can readily advance ESG goals. Microsoft, for example, partnered with Volt Energy in bringing carbon-neutral sources of power to underserved communities throughout the U.S. In pursuing environmental justice, the two companies are also deepening their connection to social justice while demonstrating that their governance is responsive to the needs of a broad and diverse group of stakeholders.
Social and economic development continues to be top of mind for me, as I have been piloting efforts with several rural community leaders to partner with corporate executives in implementing solar farming projects. That experience has brought to light three key action steps companies can take to grow strong relationships with their stakeholders and community:
1. Engage, listen, and learn to establish mutual respect. If you’re rolling out a project, such as renewable energy, that involves the community at large, make sure those community partners are at the table with you. Actively listen to their concerns. Gauge their knowledge of, and experience with, the kinds of projects you’re initiating. Adjust your presentation to their level of understanding.
2. Tailor your communications. Speak in clear terms. Where applicable, research and address previous efforts and how you will address key issues. If you say, “We want to bring you renewable energy,” define what it will mean. If you say, “We’re going to create new jobs,” discuss specifically what kinds of jobs, as well as access, training, and the application process.
3. Partner with trusted community leaders. For example, in the Black community, the church is often a hub of community life. If you’re introducing a new program, the best way to gain acceptance is to meet with the most respected community influencers and enlist their support.
After gaining stakeholder input, set a course for your leadership team that will guide the smooth roll-out of these initiatives. Look continuously to deliver, and measure, the positive social and economic outcomes realized — and to reinforce your company’s ongoing commitment to the diverse communities you serve.
Velma Deleveaux, Ph.D is an independent board director and strategic advisor to corporate executives, with distinct expertise in corporate growth strategy, enterprise risk, and supply chain risk management.
