ESG and DE&I: The Dynamic Duo of Every Great Business

How to align your ESG and DE&I strategies for an organization that performs ethically, responsibly and inclusively.

Imagine you’re building a house. You’ve got the blueprints for an eco-friendly, energy-efficient home (that’s your ESG strategy), but you don’t also think about making it welcoming for everyone who might live there (that’s your DE&I strategy)

If you plough as much time and effort into both elements and coordinate your efforts, you’ll end up with a dream home. In business, ESG and DE&I – that’s Environmental, Social, and Governance and Diversity, Equity, and Inclusion – work the same way. They need to complement each other to create a truly sustainable and successful organization. One where everyone thrives. 

ESG & DE&I: A Dynamic Powerhouse

We explored this topic in detail at our recent WeQual Think Tank: How ESG Drives Results. Featuring leading industry experts Yogesh Chauhan from HubSpot and Leanne Todd from S&P Global Commodity Insights, the session explored the importance of ESG and how ESG and DE&I together are the secret recipe for business success. In fact, if these strategies aren’t in sync, it’s like trying to drive a car with flat tires.  

Here’s what can happen: 

  1. Inconsistent Messaging: Mixed signals can confuse and alienate your customers and stakeholders. 
  2. Missed Opportunities: Without diverse perspectives, you might overlook innovative solutions. 
  3. Reputational Risks: Actions speak louder than words, and inconsistencies can harm your reputation. 
  4. Regulatory Compliance Issues: Emerging regulations often require both strong ESG and DE&I practices. 

 

Take a company that’s doing great on environmental initiatives but hasn’t focused on building a diverse workforce. They might have cutting-edge sustainability programs but lack the innovative ideas that a diverse team brings. This can stifle growth and lead to missed opportunities. The same is true for those with strong DE&I policies that haven’t been attentive to ESG. “We have customers that are starting to ask us questions around what are we doing sustainably,” says Yogesh, “and if we aren’t able to respond positively then actually, they might walk away.”  

So, how can we ensure our strategies are working in sync for maximum benefit? 

10 Practical Tips for Aligning ESG and DE&I Strategies

“Inclusive sustainability practices benefit everyone,” says Leanne.” Like a chemical reaction, one feeds the other, and vice versa.

Getting ESG and DE&I to work together harmoniously can be a game changer for any organization. Here’s a detailed look at how you can align these strategies effectively, with insights and quotes from our experts, Yogesh and Leanne. 

  1. Integrate DE&I Goals into ESG Reporting

Companies in the top quartile for gender diversity are 25% more likely to be profitable. For starters, it’s crucial to integrate DE&I goals into your ESG reporting. This means including metrics like workforce diversity and inclusion initiatives in your ESG reports. By doing so, you ensure that both sets of initiatives are visible and measurable, making it easier to track progress and make improvements. “From a global perspective, we are seeing the next evolution of ESG, which is around mandatory legislative requirements. Companies are being asked to discuss what they are doing, managing their risks, and what their plans are for the future,” says Leanne. 

  1. Set Clear, Measurable Goals

Defining specific, measurable ESG and DE&I objectives that align with your overall business strategy is essential. “Avoid grandstanding,” advises Yogesh Chauhan, “but at the same time don’t be intimidated. Be authentic. Be careful about claims such as carbon neutral/positive which is becoming discredited. Mandatory disclosure and tagging will make it easier to do like for like comparison, eg gender pay gap.” Setting clear goals helps ensure that your initiatives are actionable and impactful. 

One example might be to set targets for reducing carbon emissions and increasing diversity in leadership roles. This dual focus can drive both initiatives and help align your efforts. 

  1. Engage Leadership

Top executives need to be visibly committed to both ESG and DE&I to drive accountability and cultural change. “Leaders who champion ESG and DE&I create a ripple effect throughout the organization,” says Yogesh. When leadership sets the tone, it encourages the entire organization to follow suit, embedding these principles into the company’s DNA. Speak openly to your teams, share your vision, and bring others along on your journey. Help them share in your enthusiasm. 

  1. Foster an Inclusive Culture

Companies with inclusive cultures are twice as likely to meet or exceed financial targets. Therefore, creating a culture that values diversity and inclusion really is key to any company’s success. This involves promoting open dialogue, providing training on unconscious bias, and ensuring that all voices are heard and respected. This feeds into sustainability initiatives, too. “Inclusive sustainability practices benefit everyone,” says Leanne.” Like a chemical reaction, one feeds the other, and vice versa. 

  1. Leverage Employee Resource Groups (ERGs)

ERGs can be a powerful tool for gathering insights on DE&I initiatives and identifying areas where ESG efforts can be more inclusive. For instance, an ERG focused on sustainability can provide valuable input on making environmental initiatives more inclusive and equitable. 

For example, in an organization with a strong focus on environmental sustainability, an ERG might suggest ways to ensure that green initiatives also address the needs of diverse communities. 

  1. Align DE&I with Environmental Initiatives

When planning sustainability efforts, it’s important to consider their impact on diverse communities. This approach promotes environmental justice and ensures that everyone benefits from sustainability efforts. “The energy transition is incredibly costly. Solar panels won’t be enough to power everything. It’s a component, and everyone knows the energy story will be a bit of everything,” explains Leanne.  

  1. Invest in Education and Training

It isn’t enough to instil a sense of inclusion in your organization; ongoing education and training for employees on ESG and DE&I are vital. According to Harvard Business Review, DE&I training leads to a 19% increase in employee engagement. This not only raises awareness but also equips employees with the knowledge and skills to contribute effectively to these initiatives. 

  1. Measure Impact and Adjust Strategies

Regularly assess the impact of your ESG and DE&I initiatives. Use data to refine and improve your strategies continuously. This helps in staying agile and responsive to new challenges and opportunities. Conduct annual surveys to gauge employee perceptions of inclusivity and sustainability efforts. Use the feedback to make necessary adjustments. This should be a continuous cycle.  

  1. Promote Transparency

86% of investors believe ESG reporting leads to more long-term investments, according to a report by Price Waterhouse Coopers (PwC, 2021). Being open about your ESG and DE&I goals, progress and challenges builds trust with stakeholders. Transparency ensures accountability and fosters a culture of continuous improvement.  

  1. Collaborate with External Partners

Partnering with organizations that specialize in ESG and DE&I can provide new insights and amplify your impact. Collaboration allows you to learn from others, share best practices, and drive collective progress. One way to do this might be to join industry groups focused on sustainable and inclusive business practices. “The climate is not waiting. Companies have to come together to deliver what those targets look like,” says Leanne. 

“We have customers that are starting to ask us questions around what are we doing sustainably,” says Yogesh, “and if we aren't able to respond positively then actually, they might walk away."

In Summary

Aligning ESG and DE&I strategies isn’t just nice to have – it’s a must for creating resilient, innovative, and successful businesses. By integrating these efforts, you can build a stronger, more inclusive, and sustainable future. 

 

Want to dive deeper? Join us at one of our quarterly Think Tanks. 

“As a senior leader it is essential that you are aware of the global challenges facing your organization,” says Mark Bateman, CEO, WeQual. “Our WeQual Executives Think Tank sessions provide the insight and thinking needed to engage with board/executive level stakeholders on topics outside of your day to day responsibilities.”  

Keep an eye out for our posts where you can register to attend as a guest. All our events are open to WeQual members. 

Learn more about how WeQual can transform your organization.

Thanks to our Guest Contributors:

Leanne Todd

Head of Upstream & Advisory Solutions at S&P Global Commodity Insights

Leanne is also a WeQual Alumni and a Finalist of the WeQual Awards, AMER 2024 in the Strategy category.

Yogesh Chauhan

Director of ESG at Hubspot

Krista is also a WeQual Alumni and Winner of the WeQual Awards, AMER 2020 in the Operations category.

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