ESG BEST PRACTICE
ENVIRONMENTAL SOCIAL GOVERNANCE
Sustainability has become increasingly important in business. On the one hand, investors and consumers expect companies to increasingly deal with ESG criteria (Environment, Social, Governance). On the other hand, banks are required by regulation to take ESG factors into account in their credit risk strategy and when granting new loans.
Transparency and reporting as a basis
Transparent reporting is a key component for the successful implementation of ESG strategies. Companies such as the chemical company BASF or the fashion retailer H&M rely on detailed sustainability reports that reveal not only progress but also challenges. Standards such as the Global Reporting Initiative (GRI) or the Sustainable Accounting Standards Board (SASB) help to structure reporting and make it comparable. A prime example is the Danish wind turbine manufacturer Vestas. Through comprehensive ESG reports, the company was not only able to impress investors, but also to improve its own sustainability strategy in a targeted manner.
Integration of sustainability into the corporate strategy
Another recipe for success is to anchor sustainability aspects in the corporate strategy. Corporations like Unilever have not understood ESG as an additional obligation, but as an integral part of their business models. With programs such as the “Unilever Sustainable Living Plan” and the “Climate Transition Action Plan”, the company shows how sustainability and profitability can be reconciled. Smaller companies can also score points here. As a manufacturer of outdoor equipment, the German medium-sized company Vaude has positioned itself as a pioneer through climate-neutral production processes and the use of sustainable materials without PFCs (per- and polyfluorinated alkyl substances). The integration of ESG into product development has not only strengthened the brand image, but also opened up new customer groups.
Investing in green technologies
When it comes to achieving sustainability goals, technological innovations play a central role. Companies such as Siemens or Schneider Electric are investing massively in green technologies to improve their CO2 balances. The use of renewable energies is an example. For example, Google has committed to switching completely to CO2-free energy sources by 2030. The company already obtains more than 100 percent of its energy requirements from renewable sources by using green electricity certificates and operating its own solar systems.
Sustainable supply chains
One of the biggest challenges in ESG is ensuring sustainable supply chains. Companies like IKEA and Patagonia have shown how it’s done. IKEA has committed to using only renewable and recyclable materials by 2030. Patagonia, on the other hand, focuses on transparency and works closely with suppliers to ensure fair working conditions and environmentally friendly production methods. Blockchain technologies are increasingly being used as a tool to make supply chains more transparent and traceable. One example is IBM’s blockchain platform, which companies like Walmart use to trace the origin of food back to the producer.
Employee and stakeholder engagement
Sustainability can only succeed if it is supported by all levels of the company. Large companies such as SAP or BMW rely on internal programs to sensitize and train their employees on ESG issues. Workshops, sustainability competitions and bonus programs based on ESG goals motivate the workforce to actively contribute to sustainability. In addition, dialogue with stakeholders plays an important role. Companies that regularly involve consumers, NGOs and investors benefit from new perspectives and can thus adapt their ESG strategies in a targeted manner.
Measurable goals and long-term perspectives
Another key factor is to set measurable and long-term goals. The Science Based Targets Initiative (SBTi) has become a standard for committing companies to science-based climate targets. Companies like Microsoft have set themselves ambitious goals, such as becoming CO2-negative – and are investing a lot of money to achieve them.
Sustainability as a competitive advantage
Implementing successful ESG measures requires clear strategies, innovation and the commitment of all stakeholders. Companies that see sustainability as an opportunity rather than a cost can benefit in the long term – whether through cost savings, stronger employee and customer loyalty, or better access to capital. Sustainability has therefore long been more than just a trend, but an important building block for the future viability of companies.