10 red flags in corporate ESG
ESG considerations are material drivers of risk, reputation, growth and innovation. Experts can tell when you’re winging it.
Nowadays an organisational approach to ESG, sustainability and impact is no longer an optional add on. It should be a key consideration in strategy. A strategic approach to ESG reduces risk, builds reputation, unlocks innovation, and can even secure (discounted) capital and elevated valuations. It requires cultural integration, accountability and clear connection to business purpose and priorities.
Yet many organisations are still treating ESG as reporting compliance, team building and PR. It’s often left to a voluntary advocates and committee as “employee engagement”. This approach fails to recognise ESG as a lever for long term value creation.
Here are ten warning signs your company’s ESG strategy is missing the mark.
It lives in marketing, not in the business. If ESG is led by marketing, comms or PR functions, it’s a red flag that it’s treated as an optional add on, rather than a genuine business consideration.
You’re focused on reporting, not action. Chasing down disclosure checklists while ignoring real impact and transformation means you’re doing compliance, not strategy, while leaving a bucket of opportunity on the table.
There is no link to your commercial drivers. If your ESG isn’t tied to revenue growth, cost saving, capital access, customer demand or employee attraction and retention, it’s not ESG. You’re wasting time and money.
Everyone else has the same thing. Copy and pasted “net zero by 2050” statements don’t differentiate you. Strategic ESG is blue ocean thinking and should drive competitive advantage.
ESG is a side project, not a decision lens. If you’re not thinking about ESG with every product and service initiative, you’re not integrating ESG into your business.
Your ESG narrative sounds like show and tell at kindergarten. Real ESG isn’t buzzword bingo and motherhood statements on your website. It should be a programmatic way of solving real world problems in alignment with the company’s purpose and priorities.
No clear ownership or accountability. If ESG sits in a silo, and isn’t at the table in leadership meetings, are you really even doing it?
It’s corporate philanthropy. There’s a place for corporate giving and volunteering, but it isn’t ESG.
You measure inputs, not impacts. Counting volunteer days and money spent, doesn’t demonstrate impact and it’s not strategic. Impact is about how you’re moving the dial on real world issues.
ESG feels like a cost, not an investment with returns. ESG is a driver of value creation, not a black hole for compliance expense. If ESG is a cost without return in your business, your strategy needs a reset.
If you recognise any of these signs in your organisation, it’s time to rethink your approach.