In fact, seventy-six percent of companies surveyed increased their ESG budgets during the pandemic alongside expanding interest from the C-suite, with 60 percent of CEOs rating sustainability as either “Interested or Owns It”.
But just because there’s a spike in demand by companies for help implementing sustainability practices, doesn’t mean that every company we approach with an ESG offering is going to be ready for our help. In fact, one of the barriers that we face as sustainability consultants is what I call the “readiness factor.” This refers to how open a company is to working on its ESG performance, and more specifically how ready they are for the services we provide.
When I first started looking for new business as a sustainability consultant, I’d talk to anyone who would listen. It didn’t matter if they had the capacity or the budget or buy-in from the C-suite, if they would let me bend their ear to share all of the ways sustainability could improve their business, I was happy to spend the time telling them.
As you can probably imagine, this approach wasn’t the best business strategy and wasted time that could have been spent developing relationships with clients that were more likely to hire me.
So how can you ascertain whether or not a company is ready to invest in ESG and/or sustainability strategy? By looking at the key indicators that fall into the buckets of pain, pressure, and opportunity.
When a company seeks out a sustainability consultant, it’s often to alleviate pain. Maybe there was a quarterly financial loss (or two) resulting from fluctuating raw material costs or interruptions in business continuity such as supply chain disruptions from severe weather events. Or perhaps the industry is facing broader challenges of a crowded or aging marketplace and the business is stagnant.
Whatever the source of pain, the connection to climate change may or may not be clear to a company that provides consultants with an opportunity to connect the dots and create relevance between the issues the company is facing, its business strategy, and the ESG and sustainable solutions we provide.
Ask yourself if there is a broader context being missed. Is there a sense of urgency? Is the pain a blip or does it threaten the long-term viability of the business? Is the pain going to be sustained and/or exacerbated by the impacts of climate change?
One of my first clients was an industry association representing telecommunications companies that were required to publish residential telephone directories (aka the ‘white pages’). Those same companies generated considerable revenue from advertisers in the Yellow Pages directories – remember those?!
During the transition to the Internet but before most brick-and-mortar operations had websites, the Yellow Pages directories were an important advertising platform for business but it was clear the industry was in the midst of a complete transition.
The telecoms faced enormous criticism from environmental advocates, consumer protection groups, and even some residential committees in affluent neighborhoods protested they stop “littering their driveways with something no one used anymore.”
Images of rain-soaked phone books stacked five feet tall outside of abandoned office buildings went viral on social media and the industry scrambled to get out from under the crushing criticism and negative PR.
The point of this story is that they were ready. They engaged my firm to help design, develop and implement a 360-degree ESG business strategy that addressed all stages of the books’ lifecycle and company operations.
Pressure can build up and compound over time until it reaches a boiling point and a company finally takes action. Clear calls to action from a range of stakeholders for companies to improve and report on their ESG performance are coming from consumers, investors, suppliers, and policymakers.
It’s my humble opinion that investors finally tipped the scale. The 2020 declaration made by Larry Fink, CEO of asset management firm Black Rock, that “climate risk is business risk,” and the subsequent SEC and TCFD requiring financial disclosures including ESG, have publicly-traded companies ramping up commitments and pushing down on smaller suppliers. This trickle-down effect means that the middle market is now feeling the pressure.
Ask yourself, does the company want to go public or are they raising capital? Have their customers (B2B or B2C) begun to make ESG demands they need to meet? Are their competitors embedding sustainability as a business strategy? Are they facing increasing policy or regulatory pressure?
In the case of the Yellow Pages, policymakers, consumer groups, and environmental organizations teamed up to pressure them to create a solution for those who no longer wanted to receive directories. We got their ESG house in order, published a sustainability report, and launched a website where consumers could easily opt-out of delivery.
The opportunity side of ESG consulting is where the real fun is. The client has done the hard work to get a strategy in place, ESG performance is monitored and environmental and social responsibility goals are being met. The boxes have been checked and now it’s time to reap the rewards. At least that’s the order things should flow.
The reality is that many companies are tempted by new, sustainability-related business opportunities and they seek out consultants to help them leverage the opportunity before they’ve done the work to get their ESG house in order. This is important for consultants to keep in mind, and to help our clients understand the value of authenticity and walking the walk.
The opportunity to develop new products and services that target mission-driven companies or develop sustainable solutions to new customer segments is only going to grow as we decarbonize. This is good news for consultants looking for companies that are ready to take action on sustainability. Nearly all businesses are ready when it comes to seizing new business opportunities, and this makes constructing a value proposition for working together much easier!
Attracting and retaining top talent is another way companies can leverage the opportunity.
Even before what’s now coined the “Great Talent Reshuffle,” in which millions of American workers switched their occupations or field of work, employees have been eager to align their values with their job.
In fact, forty percent of millennials said that they have chosen a job in the past because the company performed better on sustainability than the alternative, and 10% would go even further and be willing to work for less compensation for a company that is environmentally responsible.
Employees are also consumers and globally, sustainability is rated as an “important purchase criterion” for 60 percent of consumers, with one-third are willing to pay more for sustainable products and services. What’s more, 50 percent of consumers rank sustainability as a top-five value driver.
An understanding of a company’s climate change-related pain, pressure, and opportunity can provide you with a framework by which to build a compelling value proposition, develop rapport with new clients, and enable you to feel confident you’re spending time with companies that are ready for what you deliver.
Take our ESG Consulting Quiz to see if you are ready to bring sustainability consulting into your practice.