ESG lip-service can damage any organisation. Here’s what to do

Every organisation, public or private sector, large and small, has a responsibility to operate fairly and within the law, respecting human rights, our environment, and the rules and regulations that govern business activities. 

 On a globalised world stage, even a small business trading domestically will likely access international supply chains and be subject to the myriad regulations that determine conduct both at home and, by association, abroad. 

 Increasingly, companies are judged, not just on financial performance, but also on ESG policies and practices, whether by customers, lawmakers, other businesses in the supply chain or by public perception. There are positive impacts on all aspects of operations for those organisations that invest in ESG. 

 In high-risk industries, while the reporting requirements may be high, benefits like improved health and safety measures that reduce accident rates among staff can pay dividends. At the other end of the spectrum, an e-commerce business selling clothing can gain customers if its supply chain policies are unimpeachable. 

 As organisations seek ways to differentiate themselves from competitors and the weight of evidence about climate change shifts public and legislators’ opinions, there’s been a sea change: good ESG practices are no longer an afterthought to tick a box in annual accounts filings. 

Source: Achilles

Companies and organisations are redefining supply chain management for the sake of the environment and social justice, requiring a deeper understanding of their suppliers and downstream partners. Achieving that deeper and further-reaching analysis of practices is a growing challenge, one that’s also complicated by an increasing number of legislative requirements worldwide. Modern slavery acts, carbon emission targets, and anti-discriminatory laws mean that the ways in which organisations act anywhere in the world are subject to greater scrutiny. Monetary penalties and public relations disasters await those unaware of or deliberately flouting legislation. 

Companies planning for their long-term viability now see that every purchasing decision has implications, and thankfully, more organisations are taking the lead in making good choices. 

Like all the best business decisions, companies’ choices are better made pro-actively, based on accurate and widely sourced information. Independent sources like NGOs, surveys and research findings, and examination of para-governmental papers can all give strong clues today as to what may be in place, legislatively (or in public opinion), tomorrow.  

A recent example is the OECD’s Due Diligence Guidance for Responsible Business Conduct that was introduced in 2018 to provide practical support for businesses to undertake due diligence in line with international standards on responsible business conduct. In turn, the OECD’s Due Diligence Guidance served as a foundational document that informed and influenced the development of the EU’s CSDDD legislation that was first proposed in 2022 and came into effect in April 2024. The principles and methodologies outlined in the OECD guidance provide a basis for the due diligence processes mandated by the EU directive and underpin much of the sustainable supply chain legislation that we are now seeing being introduced around the world. 

 For many companies, the EU’s Directive and similar mandates are approached reactively and therefore, sub-optimally, resulting in a series of unplanned and rushed measures that are likely costly and not entirely effective. (Requirements to comply and necessary steps to be taken with regards the Directive are detailed in this article by Achilles.) 

Planning and implementing sound ESG policies needs to be a continuous process, given the many changes both happening now and in early or advanced stages across the world. Policy changes on the horizon may dictate significant structural or operational change, and being a step ahead lowers any implementation costs in the long term, and acting early and publicly can be key differentiators even in the short term. 

 Steps organisations can take include collating the necessary data from public and private data sources, testing the temperature of public opinion, assessing business (and cybersecurity) risk, investigating extant supply chain partners, and many more.  

For most companies, these increasingly important processes are beyond their direct capability, but as the second half of 2024 looms, it’s increasingly apparent that ‘due’ diligence alone will be insufficient to do more than survive in the coming years. 

Achilles, quoted above, takes a holistic approach to collating all the data relevant to long-term ESG policies, providing critical information to organisations that will help them plan, adapt sooner, and be more successful businesses, as well as better global citizens. 

Source: Achilles

Among its data insights and consultative services, Achilles offers access to a curated, prequalified network of suppliers. Each member is proven to be the type of business that modern organisations should work with. 

Developing a better-than-fit-for-purpose ESG policy and redefining due diligence means looking at a business holistically and considering the environmental and social imperatives required for running a company or public body responsibly, now and in the future. 

Achilles is the leading independent body capable of wide data gathering and deep analysis of all aspects of ESG in 2024. Contact the team with a global reach and local offices today.