“It ain’t easy being a green leader”: with an increasing number of corporates focusing on their transition to more sustainable business practices and setting sustainability targets as a consequence, some corporate ESG leaders have found it harder to position themselves as the ‘sustainability pioneers’ they are. A reason for this may be that their targets, which were once common amongst only a few companies, exist more now as a result of more companies publishing net zero commitments; making them appear less significant as they are already further down their journey to meeting these targets. Another reason could be that slower adopters kicking off their sustainability journey appear to be making bigger jumps and creating more of an impact.
So, how can green leaders claim their rightful position as exactly that: green leaders? Through our ESG Advisory and Sustainable Finance work, we have found that a variety of approaches can work well for such companies:
Show the historic trajectory of your sustainability KPI (key performance indicator) progress, highlighting actions taken and progress already made – and compare these with relative sectoral and scientific benchmarks. Also, engage in ongoing investor and stakeholder communication throughout your entire sustainability journey and not just when you are planning to tap into the sustainable finance market. Another way in which leaders are seeking to differentiate themselves is by forging new or actively participating in strategically important business alliances and coalitions, to help deliver the transition to a low carbon economy.
Reference sectoral sustainability ranking data to back up your claim of being ahead of the pack; while to some degree still imperfect indicators, solicited ESG ratings can be a useful tool for this – as can awards and ESG indices. Some leaders are also beginning to actively develop an ESG rating agencies engagement strategy and are proactively engaging with their ratings providers to ensure they are providing a balanced and representative view of their actual performance and progress on ESG matters.
Highlight the implementation strategy for the sustainability targets you have set. Showcase how further marginal improvements (beyond what has already been achieved) still require concerted effort. Furthermore, be honest about what challenges remain to showcase added improvement. An example of this: where further emissions reductions are not feasible (because, for instance, the best economically viable technology doesn’t yet exist), outline the alternatives you are looking to employ.
4. New pastures
Set targets in areas where the company is not (yet) a leader – it is hard to be ahead of the curve on each sustainability topic. Ideally, these are topics still considered material to the firm’s overall business profile as opposed to ones outside of the natural remit of your company. For example, the Taskforce for Nature related Financial Disclosures (TNFD) has just been launched. Leaders can also differentiate themselves by being early adopters of these standards and encouraging their sector to follow suit.
5. Widen horizon
Move your narrative beyond your own company. Focus on initiatives you are undertaking or supporting to transition your wider sector and/or regions where you operate. In addition, keep a focus on impact reporting, to demonstrate how your business is delivering net positive outcomes for both investors, the natural environment and society at large.
Even when your business is operating as “sustainability as usual”, you cannot take market perception for granted. These techniques, grounded in an agile and open approach, can help you stay ahead of the pack.