Companies that don’t bake sustainability into their business values will miss out on a large pool of applicants as ESG is increasingly a top priority for talent – and the younger the talent, the more of a priority it is. For example, while Gen Z comprises 12% of the workforce—due in large part to their oldest members just being 24 years-old—half of Gen Zers say their personal ethics plays a significant role in where they choose to work, according to Deloitte. They tend to favor companies that have profound stances on ESG issues, signaling a forthcoming shift toward brands that share these same priorities.
Greenwashing is a business risk that can result in hiring challenges, stagnation in the company culture and lost competitive advantage. To this end, ESG should also be considered a core element of not just investor relations, but also of the employer brand.
Undoing the greenwashing
While the causes of greenwashing may be many-fold, the first step is to recognize the risks it poses to the business and its brand equity. By anchoring ESG programs to the risks they can eliminate, organizations can set goals that are meaningful and attainable, and address claims of greenwashing made against them, if any.
While many organizations set aggressive environmental goals without a concrete plan to achieve them, to prevent future greenwashing, boards and top executives need to prioritize transparency and actionability in their planning. This starts with the ability to report and track current ESG factors, whether negative or positive, and determine the next steps to improve these foundational metrics. Begin by benchmarking. Ascertain, for example, the company’s current Scope 1 and 2 emissions as defined by the Greenhouse Gas Protocol to manage emissions. Answer questions such as, ‘does the company source conflict minerals?’
To make meaningful and measurable improvements, visibility into the process is critical. With metrics in hand, teams can begin diving in to learn more about areas for improvement. For example, are most emissions coming from one location? Is it possible to work with the supply chain for more environmentally friendly outcomes? Find low hanging fruit and iterate for continuous improvement.
Lastly, by including the opinions of stakeholders and employees in ESG priorities, companies will be able to build a tailored and successful set of sustainability goals that benefit all parties involved.
With future regulations on the horizon, ESG must continue to be a top priority for business leaders looking to stay competitive and successful in their industries. Recognizing these risks of greenwashing can help push executives in the right direction, since financial and ESG success are inextricably linked.
