Often, ESG and Purpose are either discussed in isolation or conflated, leading to confusion at best and dismissal at worst. Charla Wong along with three experts explain what makes them different, why you need both and how to prioritize the gamut of ESG and Purpose related activities.
Purpose, as a company’s guiding North Star, should always come first when making strategic business decisions — including which ESG commitments to emphasize. But, some ESG commitments need to be a priority, even if they fall beyond the scope of the company’s Purpose.
Every business needs to understand its social and environment impacts and address them. Good sustainability practices are the core and basic requirement of being in business.
How are they interrelated?
Links between Purpose and ESG will enable smarter decision making related to strategy, operations, people and will help a company deliver on its purpose and ESG commitments both. Purpose and ESG strategies are both critical to becoming a thriving and resilient business
How are they different?
While corporate Purpose is about joint value creation between business and society, ESG is more about managing downside risk.
ESG commitments will evolve over time, whereas a company’s Purpose should endure.
How to prioritize initiatives aimed at Purpose and ESG goals
The degree to which a company can say ‘yes’ to at least one of these questions will bring the most important priorities to the top.
· Does prioritizing this help us achieve the societal impact reflected in our Purpose? (Impact focus)
· If not, does prioritizing this help us reduce risks to our business? (Risk-reduction focus)