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Why ESG Will Be Difficult

The topic of Environmental, Social, and Governance (ESG) programs continues to be in the forefront of many conversations in recent months. Most of these discussions have focused on the investment and reporting side of ESG. However, few conversations have focused on how to advance ESG objectives and operationalize them within organizations.

In recent studies we conducted, we explored how external and internal obligations were managed across an organization. In this context, external obligations were those associated with mandatory requirements (mostly regulatory) while internal obligations covered environmental, social, sustainability, and other voluntary commitments.

What we learned was that for external obligations:

  • most of the compliance resources are dedicated to regulatory obligations

  • these are managed primarily by audits and inspections

  • a fraction of the processes were controlled using a QMS or EMS

  • roughly 50% of the obligations were identified and managed

  • the level of certainty that internal obligations would be met was MODERATE

For internal obligations we learned that:

  • few resources were addressing these obligations

  • these were not being managed

  • most of the processes were uncontrolled or ad-hoc

  • most of the obligations were not documented and did not have clear goals and objectives

  • the level of certainty that internal obligations would be advanced was LOW

Given that ESG goals and targets fell mostly under internal obligations and represent as much (and perhaps more) as external obligations, it was difficult for organizations to meet their obligations using traditional compliance functions that prioritized regulatory requirements. Advancing ESG objectives using current approaches, resources, and organizational structures was not enough.

In some cases, ESG objectives sat along side of the value chain but not part of it. However, with others, ESG outcomes became part of the value created by an organization. In all cases, a greater degree of alignment and coordination (i.e. governance and operational integration) was needed for organizations to make progress and realize the benefits from ESG along with other compliance efforts.

How to Improve the Probability of Success

To succeed you must manage all your obligations (ESG, along with others), but more importantly you need to keep your promises connected to them. This requires several things working together to produce the outcome of compliance:

Better safety, security, sustainability, quality, lower risk, and ultimately better stakeholder trust.

Implementing a management program following as standard such as ISO 37301 can help you achieve those outcomes. But only if you intend to keep your promises. Otherwise, it will just be another standard among others that add more work, cost and deliver few benefits.

In a recent webinar, we walked through this standard to better understand what ISO 37301 is all about, how it works, and how to use it to keep all your promises including those associated with ESG.

Implementing this standard will help you realize more than just incremental improvements. You will experience transformational benefits that compound year over year which is needed to make progress towards ESG goals and outcomes.

You can view this webinar here:

Presentation slides are available here:



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