How to tackle ESG successfully
When companies first start looking at ESG issues, they face endless possibilities. They need to consider what aspects they want to start with and what steps they want to take after that. The important thing is to proceed in an orderly fashion and be aware of what goals you want to achieve.
Wiesbaden, August 13, 2021. The ESG journey is a long one – and not always an easy one. But those who consider beforehand what the cornerstones of good ESG communication are and approach these issues in a structured way can reap numerous benefits, such as sustainable financial products. Sustainability is not only well received by the public, but also by investors. It has become more than a “nice to have.” But what are the first steps you should take to successfully tackle ESG?
Step 1: Analyze your stakeholders
Who are the people interested in your ESG data? Only if you know that, you can communicate with them accordingly. Be sure to take a look at your competitors as well – what data are they publishing and how far along are they in their ESG process? Some of your stakeholders are the same.
ESG rating agencies are particularly important stakeholders in the ESG field. After all, they ensure the good or bad rating of your company. Regardless of the fact that the reliability of these ratings is debatable, you should try to fulfill many criteria with all important rating agencies in order to get a good rating. You will need the data collected for this for some other steps.
Step 2: Go to the dialog
Conduct a materiality analysis and talk to your key stakeholders. Take a structured approach: how can you best frame the dialogue and how do you evaluate the results? Create a materiality matrix that shows which sustainability issues impact your company the most, what stakeholders are concerned about, and why. Be as transparent as possible in doing so and explain the steps you took to create this matrix.
Step 3: Define your ESG strategy
Through the materiality analysis, you now know which topics play a major role for your company. Of course, you should tackle these first. Think about which goals you want to achieve and tackle first. Be as precise as possible and set yourself firm deadlines and measures to achieve them. This shows that you are serious about achieving the goals. Be clear where your limits are – in other words, what problems can you no longer influence on your own? ESG should be firmly anchored in your business model from now on.
Step 4: The ESG reporting
It is the most important tool for communicating your ESG strategy, goals and progress to the outside world: the ESG report. Take plenty of time for it, use frameworks, prepare your data well, and make it as transparent as possible. And yet, the report is not enough. Build an additional ESG website that contains all the essential information and data. The algorithms of ESG rating agencies will be happy about that. And don’t forget to come up with a good ESG story – especially if an IPO is planned.
Step 5: ESG communication
Now you have the perfect basis to approach your ESG communication. The data is available to you and has been made transparently available to the public. Think about communication campaigns to make your stakeholders aware of it. Influence rating agencies, investors and proxy advisors so that decisions are made in your favor from now on.
Good ESG communication: condition for your goals
You see: good ESG communication takes a lot of time. Doing all these steps properly can take over a year. All these steps build on each other to be able to achieve your goals: only through good ESG data and materiality analysis will you have meaningful information to report on. Only by doing this can you influence your ESG ratings and be included in ESG indexes. And only in this way, for example, can you achieve your goal of offering sustainable financial products. It is advisable to get professional help for the ESG area if the company does not know enough about these topics.
Do you need help establishing the topic of ESG in your company? We can help you satisfy your stakeholders with your ESG communication. Get in touch here.
Michael Diegelmann: Founder and Manager
Michael Diegelmann has gained experience in over 150 communications projects (IPOs, investor relations, M&A, crisis) and has been working in the field of capital market communications since 1997. He is the author of 16 book publications relevant to the capital markets and was formerly project manager at an international consulting firm and a Frankfurt brokerage house.