The secret to achieving ESG success in the future is clear: Digital self-service solutions
In 2021, markets saw an increased investment of more than $120 billion into ESG exchange-traded funds. This is almost double the $51.1 billion that was invested in 2020 and marks a growing change in not only the way that businesses operate, but what customers expect from companies too.
A key part of this metric is transparency. Whether they’re investors, employees, or customers, there’s an increased demand for visibility as people now require visible proof of everything that a business is doing to support ESG.
Compliance reporting is no longer an optional offering. It’s essential that businesses are able to prove their compliance and provide updates on their strategy when needed. Digital self-service solutions are the answer and could be the difference between ESG success and failure.
What is ESG?
ESG, which stands for ‘Environmental, Social, and Governance’, is a set of standards that a business can use to evaluate how socially accountable it is. It encourages companies to be conscious of their impact on every aspect of society including economically, socially, and environmentally.
The term first appeared in a 2005 study called ‘Who Cares Wins’ and the value of investing in ESG is staggering. Research carried out by the Business & Sustainable Development Commission shows that if ESG became the main focus of the world’s economic strategy, then this could lead to $12 trillion a year in opportunities and the creation of 380 million jobs by 2030.
Why is ESG so important?
76% of consumers say that they plan to stop purchasing from companies that treat their employees, the environment, and the community they operate in poorly. On top of this, 86% of employees say that they’d prefer to shop with or work for companies that show they care about the same issues that they do.
We’re currently seeing 80% of the world’s largest companies reporting exposure to physical or market transition risks as a result of climate change, and it’s predicted that climate-related weather events will cost businesses $1.3 trillion by 2026.
While these are all very compelling statistics that demonstrate a growing need for the adoption of ESG strategies, there’s one more reason that’s arguably even more crucial: global mandates. An increasing number of countries are now requiring businesses to make their ESG performances publicly available. In fact, a study of 80 countries showed that there are now almost 400 reporting provisions in place.
In order to meet these demands and ensure compliance, companies need to urgently invest in digital self-servicesolutions that will allow them to easily record, track and disclose their ESG performance.
What are the barriers to achieving ESG?
Although the majority of companies may have an ESG strategy, a worrying number believe that they’re not meeting expectations. Only 50% of companies say that they perform very effectively against environment metrics, 39% believe that their company performs well for governance, and 37% for social issues.
One of the main contributors towards these beliefs is a lack of data availability, and – more specifically – being kept from achieving goals thanks to siloed data. In fact, 24% of companies specifically cite siloed data as being a barrier to their ESG progress.
This is where digital self-service solutions come in. Digital self-service will allow companies to unlock all of this data and take steps to collate everything into one core, central location. On top of this, it allows for ongoing analysis and reporting to help companies truly understand their progress.
What is self-service, and how can it help to achieve ESG?
For many companies, aggregating their existing data is just one part of the problem. They also need to have the capability to not only cope with complex, ever-expanding amounts of data, but to extract meaningful insights and analytics from this information as well.
These digital self-service solutions need to be innovative, adaptable and – more importantly – future proof. The ability to adapt to meet new regulations or demands from investors or customers will continue to be absolutely crucial. Instead of having multiple different sources of data and information, a combined solution will be far more valued and see all of these systems integrated into one asset.
Digital self-service solutions also allow for really simple compliance reporting which will enable companies to not only meet mandates but also appeal to investors and employees too.
Tracking performance via these digital self-service solutions allows businesses to not only monitor their own performance, but to benchmark themselves against their competitors as well. This will soon be a key metric that companies will need to monitor and is likely to form a large part of any business plan or competitor research.
The benefits of self-service are countless and utilising technology like AI can result in massive cost-savings. They allow businesses to operate under a ‘hybrid’ model that allows employees to be supported in their ability to do their jobs in future by these digital self-service solutions.
How can digital self-service support employees?
Conflicting values and opinions that might once have been ignored or written off as a hazard of working with a corporation can no longer be overlooked. If businesses want to attract and retain top talent then they need to ensure that their corporate values align with the personal values and beliefs of their employees.
Investing in digital self-service solutions that engage and empower employees should be a core part of every business’ ESG strategy in order to ensure success. In fact, research shows that companies with the highest levels of employee satisfaction had ESG scores that were 14% higher than the global average.
Employee self-service is about more than just making sure that employees are trained and educated about your ESG strategies and plans, however. In order to truly excel at their jobs, employees need to have access to data dashboards and visualisations that allow them to really understand a business’ ESG successes and areas that are being actively improved upon.
This is even more important when it comes to those employees who are also decision-makers. Giving them access to a self-service portal that connects data from numerous different sources such as sales and marketing will enable them to gain a more complete overview of your business and empower them to make future decisions to further your ESG initiatives.
ESG might be the push that your business needs to invest in digital self-service, but this is just one benefit. Businesses that fail to invest will notice an impact on not only their revenues, but also on their employee retention rate and satisfaction levels. These solutions have never been more critical and are going to be the difference between success and failure for companies in the future.
