Today, having an environmental, social and governance (ESG) plan is as critical as having a financial plan - it is an essential component of an organization’s business and strategic plan. This applies to private and public companies, as well as not-for-profits.
While ESG regulations are imminent for public companies, many private and not-for-profit organizations do not always see the benefit of having an ESG plan backed by investment grade data. In fact, they often see it as an unnecessary expense. In reality, the opposite is true - it is as critical for private companies to tell their data-backed sustainability stories if they want to compete, engage stakeholders and continue to build brand value.
The requirements of companies to disclose their ESG performance is a response to the changing markets — demands from consumers, scrutiny from investors and a general insistence for higher business standards from stakeholders and society at large, regardless whether they are private or public.
Private organizations are facing similar scrutiny as public companies. Every day dozens of ratings agencies like S&P Global and RepRisk, along with apps like Good On You, are collecting ESG data and scoring private, public and not-for-profit organizations on ESG performance. Consumers and stakeholders have instant access to these apps and are making decisions based on these 3rd party unverified ESG scores, leaving a company’s reputation, and its ability to do business, vulnerable to algorithms and unverified opinions.
ESG scores have become a critical indicator of potential growth and enterprise value, and will impact a private company’s ability to:
Attract customers looking to buy sustainable products
Align with companies, as vendors or partners, that specify ESG requirements
Attract venture funds and/or raise capital.
Despite all this, in the USA 90% of organizations do not have a clearly defined ESG strategy or know their ESG scores, ESG related risks, or value creation opportunities.
Companies have a choice – own your sustainability strategy, plan your narrative and disclose your ESG performance and data; or let someone else make up their version of your story and your ESG score, which may not be pretty.
Impakt IQ is a specialized ESG and Impact consulting firm.
We Help Business Leaders Harness The Power Of ESG For Positive Impact
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