Advancing environmental, social and governance while supporting business goals

Increased awareness around climate change, racial and social equity issues and COVID-19 has changed the way many companies think about environmental, social and governance (ESG) issues.

Recent events have exposed vulnerabilities in our economic, political and social systems while illustrating the important role ESG plays, both in helping businesses remain competitive and building a stronger global community.

Look no further than the United Nations Climate Change Conference last fall, where more global entities vocalized tangible commitments to achieving carbon neutrality by 2050, an ESG effort whose impact will be felt in every business in every corner of the world.

This convergence of factors has made ESG a focal point for companies of all sizes. Well-integrated ESG strategies provide real value, helping businesses stay successful in the face of disruption while delivering for the common good of all company stakeholders.

Consumer pressures also drive ESG commitments, with younger consumers more likely to consider ESG issues when making purchasing decisions. According to PwC, over half of all consumers believe a company's purpose and values play an important role in its decision-making.

Regardless of a company's size and budget, there are ways to develop and implement an integrated ESG strategy that addresses stakeholder expectations and delivers meaningful outcomes. Here are six steps for developing and advancing ESG while also supporting business goals.

Identify ESG issues significant to your stakeholders. Successful ESG strategies consider perspectives from multiple stakeholders. Businesses should assess and rank issues that are important to employees, customers, suppliers, investors and other stakeholders.

As they identify core priorities, keep in mind that some issues such as COVID-19, racial equity and climate change often transcend businesses or industries, applying to all entities committed to systemic change.

Develop a reporting and measurement framework. What gets measured gets managed, so it's essential to build a measurement framework around ESG priorities. Consider consulting popular ESG frameworks and tools, such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), United Nations Sustainable Development Goals (UN SDGs), United Nations Global Compact (UNGC), CDP, Task Force on Climate-related Financial Disclosures (TCFD) or the World Economic Forum's International Business Council (IBC) - to set goals and measure progress.

The metrics provided can be valuable in helping companies track performance and communicate progress to stakeholders.

Take an intersectional approach. As you build an ESG strategy, you'll notice that many issues are related. Ensure that your strategy recognizes the complexity and intersectionality of these issues and addresses root causes, not just symptoms. For example, lack of access to affordable housing may correlate with intergenerational poverty and racial inequality. If your goal is to drive greater racial equality, affordable housing may be a key pillar of your strategy.

Look across your supply chain. Capitalize on opportunities to work with third-party partners that share similar ESG commitments to create a broader industry impact. Consider how you can empower, and hold accountable, partners along your supply chain.

Depending on the results of your stakeholder assessment, you may consider setting goals relative to energy reduction, employee compensation by vendors and boardroom diversity.

For example, Bank of America research found that more than 75% of Nasdaq companies don't have a woman, underrepresented minority or LGBTQ+ member on their board.

Companies can take meaningful action to address underrepresentation in the workplace by doubling down on transparency and reporting, setting company and supplier diversity goals, enhancing trainings, and rethinking approaches to recruiting.

Integrate your ESG strategy across the business. ESG initiatives should be deeply integrated across the company to deliver meaningful results. ESG goals empower executives to think about the longer-term viability of the company.

Every business unit can support ESG initiatives, whether it's developing a fair labor supplier strategy, investing in sustainable and climate-resilient infrastructure, sourcing sustainable energy, or revamping HR policies to increase diverse recruiting, hiring and retention. ESG is a team effort, through and through.

Remember the power of your people. Even without a large budget for ESG initiatives, you have the power of your people.

Empowering your employees to drive grass-roots change in your community, with the support of your organization, can help inspire meaningful change. Every organization has something to contribute; it's not always about dollars, but it is always about action.

Grassroots change can be as simple as an internal paperless campaign or launching an employee network dedicated to exploring ways to enhance department sustainability. The important thing is creating an avenue for participation.

Team members who are empowered to take action on the ESG initiatives that matter to them are more likely to remain engaged and productive while enhancing value across the organization.

Businesses with well-articulated, deeply integrated ESG goals strategies are more resilient and better positioned to create long-term value for stakeholders and meaningful results for the communities in which they operate.

With the support of every business unit, ESG goals empower executives to think longer-term about the viability of the company, its role in building a stronger, more equitable world and help it deliver on the promise of stakeholder capitalism.

• John Compernolle is the Market Executive of Global Commercial Banking for Bank of America Chicago.