How can you improve your ESG performance by engaging with stakeholders?

I had the opportunity to work with a company struggling to improve its ESG performance. They were facing several challenges, including pressure from investors, increasing customer demand for sustainable products and services, and new government regulations. To address these challenges, the company decided to engage with its stakeholders more meaningfully. They started engaging stakeholders through meetings, surveys, and focus groups. They developed a comprehensive plan that reduced emissions, increased renewable energy use, and sourced from sustainable suppliers. This resulted in improved performance, increased customer loyalty, employee morale, and stronger community relations. Engaging stakeholders is crucial for improving ESG performance

In my opinion, understanding and engaging with stakeholders is at the core of effective ESG practices. It's not a one-size-fits-all approach; different stakeholders have varying interests and concerns. By identifying and prioritizing their needs, a company can tailor its ESG efforts to create meaningful impact and build trust. It's a strategic move that goes beyond compliance, contributing to a more sustainable and stakeholder-driven future.

Stakeholder engagement helps identify the most material ESG issues relevant to your organization. By understanding what matters most to stakeholders, you can prioritize your efforts on the issues that have the greatest impact on both your business and society.

In my view, stakeholder engagement should be purpose-driven and meaningful. Having clear objectives and using the right methods ensures that engagement efforts aren't just a formality but a genuine commitment to collaboration and positive change. It's about fostering open dialogues, understanding diverse perspectives, and working together towards shared ESG goals. When done right, it can be a catalyst for innovation and responsible business practices.

Through dialogue with stakeholders, you can set clear ESG goals and priorities that align with their expectations and your business strategy. This ensures that your efforts are focused on areas where you can make the most significant positive impact.

One valuable practice I've discovered is maintaining continuous and open consultation with stakeholders. This approach fosters trust, encourages active participation during implementation, and facilitates feedback, resulting in a more collaborative and successful process.

The implementation of an engagement plan is a two-way street. It's not just about broadcasting information but fostering genuine interaction. Regular and transparent communication builds trust and accountability. It's a testament to a company's commitment to shared ESG values and a key to achieving meaningful, positive change. When stakeholders see their input reflected in actions and outcomes, it strengthens the bonds and drives collective progress.

Stakeholder input can inform your ESG reporting and disclosure practices, making them more comprehensive and relevant. Reporting on ESG performance based on stakeholder expectations demonstrates accountability. Stakeholder engagement can lead to collaboration opportunities with external organizations, NGOs, industry associations, and government agencies. Collaborative efforts can amplify the impact of your ESG initiatives.

I think, evaluating stakeholder engagement is a critical step in the ESG journey. It's about assessing the real impact, not just the effort. By measuring the effectiveness of interactions and their influence on ESG performance, companies can refine their strategies and create a positive feedback loop. This continual improvement approach is essential for staying aligned with stakeholders, fostering innovation, and driving long-term sustainability and value.

Tailoring ESG practices to your industry is essential. Each sector comes with unique challenges and opportunities. Energy companies, for instance, play a pivotal role in addressing climate issues. Embracing industry-specific standards and initiatives, like TCFD and RE100, showcases a commitment to responsible energy practices. This sector-specific focus is crucial for driving progress and making a significant impact on global sustainability goals.

For example, in the real estate industry, you may need to communicate with tenants to explain the need for green leases, which include green clauses that set out the responsibilities of owner and occupier in terms of sustainability, such as energy efficiency, waste reduction/management and water efficiency.

In my view, learning from ESG leaders and peers is a smart move. Benchmarking against industry standards and engaging with networks like the UN Global Compact or WBCSD provides valuable insights and keeps companies at the forefront of sustainable practices. It's about collaboration, knowledge exchange, and pushing the boundaries of what's possible in ESG. This collective effort can accelerate positive change, benefiting both businesses and the world.

Stakeholder engagement can provide insights into industry best practices and peer performance. This information can help your organization benchmark its ESG performance and learn from others

Effective stakeholder engagement requires a systematic approach, clear communication, and ongoing dialogue. It's important to tailor engagement strategies to the specific needs and expectations of your stakeholders and to demonstrate a genuine commitment to addressing ESG issues. When done well, stakeholder engagement can lead to improved ESG performance and a stronger reputation as a responsible and sustainable organization.

Stakeholder engagement is the bridge to a more responsible and sustainable business. It's about building trust, driving innovation, and making a positive societal impact. ESG isn't just a compliance requirement; it's a strategic imperative. By actively involving stakeholders, organizations can stay agile, address emerging challenges, and shape a future that benefits everyone. It's a journey worth taking, not just for the business but for the world as a whole.

We need to have an open engagement and be transparent with our stakeholders. This is to set out what would be the expectations we want to have between parties so that each parties know roughly what are the expected outcomes of the engagement. When I said open and transparent is that, in an engagement, we should be fluid in not only on communicating what we wants, but to also be a great listener to what others want as well. Imagine being a diplomat with great diplomacy skill. Additionally, it is best to make sure that the language we use are adapted to the situation and to the group we are engaging. The way we engage as professional cannot be similar to the way we engage with common folks without the same background.

Implementing a Life Cycle Assessment (LCA) is actually a pretty good way of engaging your stakeholders to improve ESG performance. A lot of times, this involves working with stakeholders in the supply chain, both internally and externally, to identify ways to reduce carbon, improve energy efficiency, or reduce waste in the manufacturing / product life cycle.

Viewed from the eyes of an internal or external ESG consultant, we should understand if the stakeholders (all/some?) drive the ambition, knowhow, implementation, and/or resistance to change (it happens!). Even if objectives are clear, the proposed activities may not be readily measurable, the scope may be too limited or missing scope. Thus, I would propose not only identifying and classifying stakeholders, but also engaging them through a discovery phase. You may even want to consider anticipating examples and best practices here. This way, you will not only validate preconceived objectives but potentially test expected outcomes.