"Having a solid ESG strategy is moving rapidly up the list of key stipulations from those looking to invest in a business."

Jim Shaw
CEO & Founder, Shaw & Co

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Ambitious UK climate targets

Environmental, social, and governance (ESG) issues are no longer the preserve of the hastily concocted corporate CSR report.

That the UK government has set the world’s most ambitious climate change target – to cut emissions by 78% by 2035 (compared to 1990 levels) and to bring it more than three-quarters of the way to its target of net zero by 2050 – should serve as a warning to all SMEs that such issues are here to stay.

Perhaps most importantly, for business owners dreaming of one day selling up and retiring, having a solid ESG strategy is moving rapidly up the list of key stipulations from those looking to invest in a business, let alone buy one.

In terms of the ‘Environmental’ aspects then whether you regard COP26 as an unmitigated success or disaster is of no consequence. The fact remains that once you start measuring and cutting things such as energy, water and waste you are not just being environmentally aware and a good corporate citizen, you are also saving money and trimming unnecessary fat, making your business far more svelte and attractive.

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"It's not just about getting a badge."

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Green initiatives

The UK government has a raft of ‘green’ campaigns and initiatives – its Heat and Buildings Strategy, the Treasury’s ‘Greening Finance’ report etc – while there are an array of business accreditations including the much vaunted B-Corporation status that companies can get involved with. Of course, there are forms to fill in, things to plan and suchlike, but these initiatives are rapidly becoming a given for any modern business – let alone one that considers itself a good corporate citizen. And of course, don’t forget, if you don’t sign up to things like this then you can guarantee your rivals will!

For the ‘Social’ then you only have to look at the recent headlines around the unprecedented number of unfilled job vacancies to realise that this is a jobseekers market and companies really need to up their games if they are to attract the brightest and the best. Over the last decade, the boundary between the workplace and our personal lives has become ever more blurred so the right, diverse, inclusive culture is an absolute must.

A question of governance

And finally ‘Governance’. According to the CBI “Focussing on the governance of your business – and in particular devoting focus on risk management – will not only appeal to your investors but your customers and your supply chain. Good risk management practices will also bring their own costs savings in terms of insurance coverage and premium pricing.” This should be a given – running your business in an efficient, considered way for the betterment, not just of your bottom line, but for your employees and society in general.

Don’t forget that ESG issues are not some fad amongst the UK and its closest allies – they are now of huge global importance. Governments and large corporations across the world have built them into the very core of their mission statements – rather cynically some would say – but this is now filtering down through the whole system, the whole supply chain, and that means you…

Sources:

ESG: why SMEs should care and how to get started | CBI
‍The challenge and opportunity of ESG reporting for SMEs - Maddyness UK
‍SME ESG ambitions hindered by lack of management support (consultancy.uk)

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