Small businesses (SMBs) recognize the importance of being socially responsible; in fact, one survey found that 83% of respondents believe a business’ reputation is impacted by factors related to ESG (environmental, social and governance). However, given the current economic uncertainty, executives can be hesitant to commit to large-scale consultants or programs.
The great news is that ESG initiatives can be efficient without being extensive, allowing companies of all sizes to make strides within the financial constraints they face today. Here’s what SMBs should know to develop or expand responsible ESG efforts.
First, what are the 3 pillars of ESG?
As a refresher, ESG principles focus on three main areas:
- Environmental, which refers to issues that impact climate change;
- Social, which covers diversity, equity and inclusion standards;
- Governance, which encompasses the policies and procedures under which a business operates
You can find out more in this story on the ABCs of ESG.
Use your core values to influence your ESG priorities
If you’re just embarking on an institutional ESG plan, start by working with management to define your company’s mission and values if you haven’t already had a deep conversation in this area. Once you determine your “why,” it’s easy to discover where that purpose leads you.
That can illuminate how to tie your initial ESG criteria to the “path of least resistance,” as you align new initiatives with stated business purposes and make advances in areas you can control.
For example, a small law firm could consider the “social” side of ESG factors by choosing to represent clients in underserved populations or seeking out and devoting more resources to pro-bono causes. A restaurant would concentrate on environmental issues, such as how to curtail energy usage and waste.
Listen to your customers
Because ESG can be a key driver of consumer preference, it’s important to explore the values of your target customer to see where you align. Research feedback, requests and other data to see what they’re asking for, which can help you identify how to tie your purpose to your product portfolio.
Maybe you could use resources differently to make a long-term impact, such as eliminating excess packaging, which helps consumers manage their own waste. Or if you’re a pest management company, offer natural, non-chemical remedies and alternative ways to protect species, which is likely to please climate-aware homeowners.
A more robust ESG program can help attract and retain top talent, which will ultimately save you money by avoiding costly investments in hiring and retraining. That’s why every business must consider people-related issues and how you can approach them more responsibly.
The first step should be confirming you have equal pay practices, which is a strong component of employee retention. Then commit to inclusion all along your employee journey, starting with your hiring and onboarding practices as you aim for a more diverse workforce.
A successful ESG program must have buy-in from your senior management, but it also relies on support and input from employees at all levels. By inviting them to have a voice and participation, they will feel a sense of ownership and will be more likely to share ideas, implement programs and embrace potential changes. Help them understand the benefits, both to the company and the community as a whole.
Report back on your efforts
It’s critical to track the breakthroughs you’re making and communicate your progress with internal and external audiences, such as investors and other stakeholders. Consider developing an annual report or year-end summary that records your performances and highlights the specific steps you’ve taken toward attaining ESG goals. This type of ESG analysis has the double benefit of keeping you accountable should your enthusiasm wane as competing priorities emerge.
You also can showcase employees and applaud their efforts throughout the year through social media posts and articles in customer newsletters, which can help boost their pride and increase engagement with ESG initiatives.
There’s incredible power in aligning your actions and words. By sharing your successes, the evolution of your ESG program will become woven into the fabric of your organization and create even more momentum.
Making a difference wherever you are
As an SMB, you may assume your efforts won’t have the same impact as that of a larger corporation. But the truth is that every organization should be aware of their intentions and make conscious choices to do their part. SMBs are an integral part of the community, and focusing on environmental stewardship allows you to make a difference while simultaneously elevating your business among your peers.