Leverage ESG to Fast-Track Sustainability and Member Value

Delivering member value gets a lot of airplay in this blog and across the association community. There are good reasons for that intense focus. Associations have new, strenuous competitors. Other providers are offering attractive education and networking opportunities; while social and cultural changes are limiting the time volunteers have to participate.

The complexity that created that competition is also bringing new professional challenges to association members. Although the forecast sounds gloomy, there is good news hiding in the clouds. Along with a demanding marketplace come tremendous opportunities to support our audiences in ways that uniquely play to the strengths associations bring to the table.

Be the Hero

We have a chance to be heroes. We can use our ability to see broadly across the professional landscape to help members understand, address, and navigate issues where there is little precedent or tradition to fall back on. 

DEI is one area where associations already provide guidance to a wide range of industries. ESG offers another significant value proposition. Association leaders may not be as familiar with that acronym. The term bundles several concepts that we don’t typically consider as a group.

ESG stands for environmental, social, and governance activities as they relate to the larger, and increasingly urgent, idea of sustainability.   

Evaluating these initiatives under one umbrella comes from the world of finance. As green consciousness grows, investors are demanding insight into how companies are stewarding the earth and whether they are acting responsibly within their human communities. The Corporate Finance Institute explains the concept like this.

ESG is a framework that helps stakeholders understand how an organization is managing risks and opportunities related to environmental, social, and governance criteria (sometimes called ESG factors).

ESG takes the holistic view that sustainability extends beyond just environmental issues. While the term ESG is often used in the context of investing, stakeholders include not just the investment community but also customers, suppliers, and employees, all of whom are increasingly interested in how sustainable an organization’s operations are.

Ten years ago, sustainability might have been viewed as a fad or fringe issue. However, in 2018 the Global Sustainable Investment Review reported that ESG investing was greater than $30 trillion—up 68 percent since 2014 and ten times greater than the 2004 totals.

According to Allison Herran Lee, Acting Chair of the SEC, the “perceived barrier between social value and market value is breaking down. This change is driven by investors, lenders, asset managers, and ultimately consumers, making it an essential consideration for every business, whether or not under SEC regulation.”

Integrate DEI with ESG

If you have a formalized DEI program, now would be a good time to consider putting that initiative into a larger values portfolio. DEI is a perfect fit with overall strategies for organizational sustainability or ESG. The two abbreviations make a happy couple.

What does environmental, social, and governance sustainability mean? Associations should look at this question through both an internal and an external lens. Of course, you must evaluate how each component of the triad plays out for your organization. But more importantly, consider how exploring these ideas will affect your members, and how to help them promote ESG in their business practices. Because if they are not thinking about ESG issues today, they are likely to be caught off guard when compliance becomes an imperative for success.

Take Action

The three components of ESG can be described like this:

Environment

An organization’s stewardship of the earth and its carbon footprint as well as the impact of its business on climate change.

Areas for Evaluation:

• Energy and water usage
• Pollutants and emissions
• Travel
• Waste disposal
• Green space

Related Activities:

• Utilize energy-efficient systems
• Track and report on emissions
• Develop standards
• Implement green travel policies
• Provide public transportation vouchers
• Improve recycling and waste disposal procedures
• Safeguard or develop green areas

Social

The management and quality of relationships with internal and external constituents.

Areas for Evaluation:

• Organizational culture
• Diversity, equity, and inclusion
• Worker safety and comfort
• Employee wellness
• Sexual harassment
• Social responsibility
• Philanthropy

Related Activities:

• Formalize DEI policies
• Create an employee wellness committee
• Initiate a cultural assessment
• Strengthen human resources activities
• Ensure equitable salary policies

Governance

Executive and volunteer leadership and oversight for operations.

Areas for Evaluation:

• Volunteer and executive leadership performance
• Board development
• Conflicts of interest and whistleblowers
• Nominating committee and election of directors and officers
• Business continuity plans
• Leadership succession
• Overall business transparency

Related Activities

• Develop a code of conduct
• Clarify and formalize conflict of interest and whistleblower policies
• Initiate best practices for nominations and appointments
• Create business continuity and leadership succession plans
• Publish minutes of meetings

Reap the Benefits

These are just a sample of the kinds of activities that could come under consideration. ESG covers a lot of ground. If you are looking for a place to start, you might appoint a committee of volunteer and staff leaders to gather data, research which issues are a priority for your group, and identify goals in each ESG category to complement your strategic plan.

The landscape may seem overwhelming, but there are good reasons to find your sweet spot and take the lead for your members before they get ahead of you. A survey of executives in the oil and gas industry, developed by the Daily Oil Bulletin and the Bennett Jones Law Firm, identified these areas where associations could provide meaningful support: 

• Promote ESG as critical to the future of industry and lobby governments to support industry efforts.
• Highlight best practices and simplify the selection of tools and resources.
• Organize shared learning sessions, offer training courses, and create material handouts and presentations.
• Ensure there is alignment between associations. ESG is already lacking in standards, so associations working in silos aren’t effective or productive.

Most associations are ideally positioned to promote ESG awareness and skills within their industries. Whitepapers, newsletter articles, guidelines, templates for policies and procedures, and serving as a clearinghouse for innovative business practices are just a few of the ways to help.

Members aren’t just evaluating your ESG activities from a business perspective. It’s common knowledge that Gen X and Z view a commitment to sustainability as important in the brands they support and endorse. The 2021 Deloitte Millennial and Gen Z Global Survey reports that over 40 percent of both groups of respondents made values-based career choices. To attract younger members and new talent, put ESG at the top of your agenda and vigorously promote your initiatives.

There are plenty of statistics to demonstrate that these values are great for people, the planet, and last but not least, the bottom line. Good stewardship of human and financial resources is smart leadership.

McKinsey reports that sustainability reduces costs and can increase operating profits by up to 60 percent and a Deloitte study demonstrates that an inclusive culture can improve both profitability and productivity by over 20 percent.

But ESG’s biggest advantage will be realized when associations fast-track member value by supporting its principles and promoting sustainability throughout their professional communities.