A successful approach to ESG standards goes beyond mere compliance
Author: House of Eden
- Businesses are focusing on sustainability and improving products, services and supply chain practices
- The need for companies to create sustainable and inclusive future plans is imperative
- IMD identifies the most important sustainability trends for companies
In the face of global challenges such as climate change, biodiversity loss and social inequality, companies around the world are becoming increasingly proactive in dealing with sustainability issues. According to experts from the International Institute for Management Development (IMD), they are taking on new challenges to make their business operations more sustainable and thus reduce their ecological footprint.
Didier Cossin and Sophie Coughlan of the IMD Global Board Center emphasize that a successful approach to environmental, social and governance (ESG) compliance goes beyond mere compliance. They argue that it is about aligning the identity of the board with ESG issues and recruiting sustainability specialists.
Companies set sustainability goals
The IMD experts identified a number of sustainability trends that companies should strive for:
- Climate-friendly supply chains: In a move beyond net-zero sustainability goals, companies are striving to make their supply chains more climate-friendly overall.
- Organizational changes: To better serve frontier markets, companies are making organizational adjustments that facilitate investment in sustainable business practices.
- Family business and data usage: The next generation of family businesses is driving data-driven sustainability by using digital tools to manage sustainability data.
- Response to war and energy shortages: In the face of global events and energy shortages, companies are increasingly focusing on energy efficiency and the use of renewable energies.
- Consideration of biological diversity: Companies integrate the protection of biological diversity and natural resources into their climate and sustainability goals.
- Emotional intelligence in the company: The sharing of emotions and the use of emotional intelligence are becoming increasingly important for healthy and sustainable top performance in companies.
- Sustainable supply chains in the luxury segment: Luxury brands are leading the way and developing sustainable supply chains to minimize their environmental footprint.
- Adjustment of Board and ESG targets: Companies are adjusting board composition and responsibilities to better align with ESG goals and recruit sustainability specialists.
- Glimmer of hope for the climate: Despite disappointing progress in climate protection, there are positive trends such as the increasing number of green start-ups, massive investments in renewable energy and the conversion of thousands of companies to more sustainable operational management strategies.
- Sustainability strategy through regulations: New regulations are driving corporate sustainability strategy, with a successful approach going beyond mere compliance.
Knut Haanaes, Professor of Strategy and Lundin Chair in Sustainability, points to positive trends despite disappointing progress on climate action. These include the rising number of green startups, massive investments in renewable energy, and the shift of thousands of companies to more sustainable operational strategies.