Current global issues encourage business leaders to integrate ESG constraints into their strategy.
Environmental, societal and governance (ESG) criteria are currently in all corporate communications. Many managers consider it a priority to integrate them into their strategies, yet there are still disparities regarding the definition of a successful ESG strategy.
To understand these differences in perception, we sat down with Edua Dickerson, vice president of ESG and finance strategy at ServiceNow. She is in charge of developing, implementing and managing the ESG strategy. She also leads finance, talent and reskilling initiatives.
She presents her global vision of the efforts that companies must deploy in the environmental, societal and governance field, explaining to us that we are currently at an inflection point for these programs around the world.
ESG is in everyone’s speech. But why only now?
We are all aware that the sustainability of our planet is at stake. If the Earth becomes unlivable, we are all losers, even the best run companies risk big. Moreover, for the first time, we have the resources to address societal inequalities. Companies are therefore focusing on ESG policies and practices that combat global warming and help create a safer workplace for a fairer and more equitable society. It is in their interest as individuals and as a company.
Companies are finding that ESG policies generate strong values that help fight crises like pandemics, racial inequality, and increasingly nasty cybersecurity threats. These crises are interconnected at national and international levels and they cannot be solved by a snap of the fingers. It will take years of concerted effort to address this and it is a central focus of all ESG programs and policies.
What are the elements of a solid ESG strategy and how to develop it?
ServiceNow’s ESG strategy is based on three main pillars: preserving our planet by promoting the transition to a carbon neutral world, creating equitable opportunities by cultivating diversity and increasing community investments, and finally, acting with integrity by creating a climate trust through ethical, transparent and secure business practices.
My role as Vice President of ESG Strategy is to design, activate and promote our ESG policies by ensuring that they are an integral part of the company’s DNA. We want to see impact beyond our four walls to make it easy for everyone to work better, live their best lives, and contribute to a better world. I believe this is possible because we have the tools and the technology to solve some of the biggest challenges on the planet.
Do you think strong ESG constraints help companies stand out?
Yes ! Studies show that companies whose leaders engage on ESG issues benefit from faster growth, greater operational efficiency and increased transparency.
Their companies also meet or exceed the increasingly high expectations of modern consumers and investors.
An OpenText study shows that 83% of consumers worldwide are willing to spend more if they can be sure that what they are buying is from an ethical source. 88% of them say they will buy first from companies that have ethical sourcing strategies in place. This therefore confirms that ESG efforts have a positive impact on a company’s reputation. We’re also seeing more and more consumers want to turn to companies that share their values in areas like global warming and social justice.
Does ESG improve the bottom line?
Of course, and studies confirm it, ESG programs clearly have a beneficial impact on the bottom line of companies: McKinsey recently published a report in which we learn that the best performing companies in terms of ESG benefit from 10 to 20% faster and more valuable than their competitors, while reducing costs by 5-10% compared to other companies in the market. And according to a 2021 IDC report, 74% of senior executives consider ESG factors to be very important in creating business value.
We should also not forget the additional advantage that strong ESG initiatives bring to attract and retain the best talent in a very competitive labor market. A recent study by PwC tells us that 86% of employees prefer to work for companies that have the same concerns as theirs.
“Being a global corporate citizen (beyond being a smart business leader) means being one step ahead of regulations. »
What about regulatory compliance?
Multinational companies face a wide range of legal, tax and environmental regulations regardless of the markets in which they operate. The European Union generally has the most advanced regulations since they are generally adopted elsewhere and end up becoming the standard throughout the world. In the United States, the Securities and Exchange Commission (SEC) has just proposed new regulations to improve and standardize the climate-related data that public companies must provide.
Being a world-class corporate citizen (beyond being a smart business leader) means being one step ahead of these regulations. In this way, when voluntary standards become mandatory, these companies are already in compliance with these regulations. And again, investors are taking notice: European companies, at the forefront of ESG initiatives, are beginning to post higher stock market returns (12% higher according to a recent FT Adviser study).
I imagine this trend will continue as more and more investors vote with their wallets for lasting change.
How important do you think technology is in designing an ESG program?
Technology is essential for the good governance of an ESG program. You can build a more comprehensive and focused ESG strategy by connecting independent services and aggregating their data. This requires having the right platform to bring together traditionally siled and independent departments, such as finance, human resources, risk, security, communications and management. Once they are all connected, they can work better together and design the implementation of an ESG strategy by developing clear guidelines for the company and suppliers.
By having everyone participate in a single platform, it is possible to automate the processes of collecting data, measuring progress and reporting on compliance, essential elements of consistency and transparency. Automation helps to ensure that resources and energy are devoted to useful developments and not to manual and repetitive tasks.
In summary, it is the technology that makes it possible to centralize and optimize everyone’s efforts to integrate ESG constraints and deploy them within the company.