You are currently viewing Building Your ESG Program: Part 1

Building Your ESG Program: Part 1

The first step for building your ESG program includes assembling your team that will work on figuring this all out. Although easy in concept, there are many real-world challenges to getting started. 

Assembling the right team with appropriate knowledge and authority is the critical first step in building out a successful ESG program. Companies can face several obstacles during this step.

Overcoming the Challenges 

The chief obstacles in launching an ESG program typically are: 

  1. (Limited bandwidth) Time Availability – Most people on your ESG team will have existing duties and responsibilities that they will continue to have to prioritize. For those who may be transitioning into the ESG space it can also be daunting to quickly learn a new field.
    If new hires are brought in to manage your ESG program, they still will need to rely on many within your company to properly assess and implement your ESG strategy. It can be hard to get the focus and attention you need from others to quickly ramp up your ESG program.
    This is just reality, and it remains the largest challenge that most companies have. There simply aren’t enough hours in the day and priorities often favor the tasks that people were originally hired to perform. 
  2. Limited ESG knowledge – Many people placed on your ESG team will have little – and perhaps no – background in ESG-related matters. Although this is the norm, it can be intimidating because without knowledge, it’s tough to craft sound strategy and workflows. 
    When you add in the fact that the field is rapidly evolving, it really gets complicated. Even those with an ESG background find it tough to keep up with constantly changing rules and regulations, as well as rapidly evolving demands of investors, customers, suppliers, and communities. 
  3. Limited ESG foundation – When starting an ESG program, you will truly be building an initiative from scratch. This is unlike financial reporting, which has decades of established laws and standards. Your company won’t have those guideposts to follow.
    Your company won’t have disclosure and internal controls that help to ensure that you are collecting reliable data from the corners of your organization. It can truly feel like the Wild West at times. 
  4. Limited authority – This will vary by company, but its importance can’t be overstated. How much authority has been granted to your ESG team? Does your CEO and CFO buy into its success? Does your ESG team leader have standing within the company to command respect and get the job done?
    Without authority, an ESG team is facing an uphill battle that may not get the job done properly despite their best intentions. A successful team must define authority in terms of oversight to lead and build strategy and buy in from all the appropriate internal teams. 

Building the Team 

Based on our work with clients, we’ve witnessed the types of traits that appear to work best when launching an ESG program. These traits include: 

  1. Project management – The leader of the ESG team should have a solid project management background. The job of assessing where a company currently stands is not an easy one and requires the ESG team to reach deep into the company to collect all sorts of information. This is a project that needs to be properly managed.
  2. Organized – A big part of being organized is systematically documenting along the way what has been accomplished, as well as the procedures it took to get there.
    That way, the processes employed can be replicated and improved upon for next time – as well as creating the initial groundwork for something that can be audited, if need be, at some point. 
  3. Communication – There is an art to communication, it is necessary to be persuasive and get your team members motivated, as well as to obtain the deliverables you seek from others within the company.
  4. Team player – You may well be working with people that don’t report to the same manager as you. The ESG team often is pulled from different silos – and that lack of a formal “team” designation can result in different priorities.
    The only way to ensure the success of the ESG team in these circumstances is to put aside the potential challenges that these types of situations can create and be a team player.
  5. Resourcefulness – Building anything from scratch is a huge undertaking and more often than not, the proper resources aren’t allocated to building the ESG program.
    That might happen because senior management isn’t firmly committed to the mission yet. That might happen simply because of a lack of awareness of what a large undertaking this can turn out to be.
    The key here is to take on that challenge to do more with less and not let it interfere with the morale and mission of the team. 

By leveraging our technology and ESG expertise, ZMH Advisors helps companies overcome these challenges and assemble the appropriate teams to create effective ESG programs.