Thought Leadership

Five Signs Your ESG Strategy Is Flawed — and Five Ways to Fix It

By Stephany Lapierre

Originally featured on Supply Chain Brain

Environmental, social and corporate governance (ESG) strategy is becoming a growing priority for businesses across the globe. Between individual corporate goals and increased regulation by local, regional and federal governments, companies are under growing pressure to build more ethical and sustainable supply chains.

While such strategies are a step in the right direction, organizations must undertake constant reviews to ensure that their methods are effective in reaching ESG goals. Unfortunately, many teams aren’t always able to recognize when there’s a need to rethink strategy, or have the know-how and tools to pivot.

Following are some common tell-tale signs that your current ESG strategy is flawed, along with some steps you can take to fix it.

ESG is treated as a PR tactic. Many organizations have adopted ESG strategies in response to social and environmental issues around the globe. However, it’s not enough to simply say you’re going to focus on ESG. You have to onboard sustainable and socially conscious suppliers that can help you meet the goals you announced via social media and press releases.

There’s too much focus on the company’s rating. While it may be a goal to increase your organization’s ESG rating, this can often lead to a “check the box” mentality. By prioritizing individual tactics within your ESG strategy and holding the team accountable for organizational goals, you can focus on efforts to make impactful change. A better ESG rating will often be the outcome.

The organization lacks consistency. To truly execute ESG strategies, your entire organization has to be in line and adhering to tactics. If some departments are contributing to ESG goals and others are ignoring them, you create inconsistencies within the organization, which will appear uncommitted to sustainability and social initiatives.

Single departments own ESG. Often individual roles will be created to focus on ESG strategy. But if they don’t work with other departments, those strategies can be seen as separate from overall company goals. There needs to be total alignment between departments to ensure that those goals are met.

Manual data management methods are used. Is your company using spreadsheets or other manual methods to track supplier data and ESG spend? Manual forms of data management lead to a limited view of current and potential suppliers. They can also allow for increased risk when data isn’t updated properly as business functions fluctuate, resulting in missed opportunities for better spend management.

Once you’re able to recognize the flaws within your current ESG strategy, you need to address and remedy them. Following are five steps you can take:

Consider self-certified suppliers. Not all suppliers who qualify as diverse or sustainable possess official certifications. By expanding your searches to include self-certified suppliers, you can broaden your scope of supplier discovery and gain a wider view of businesses that align with your ESG goals.

Lean on machine learning and artificial intelligence. Manual methods of data management result in stale information that prevents you from using supplier data for innovation. Machine learning and AI allow you to consistently harvest, evaluate and analyze supplier data to quickly meet ESG goals.

Stay on top of change. In the tumultuous world of modern-day procurement, you can’t simply trust whom you know when it comes to meeting ESG goals. Business functions are constantly changing, and you need to be able to access up-to-date supplier data. In the process, you avoid working with suppliers that aren’t contributing to your ESG strategy, and are adding risk to your supply chain.

Double-check your ESG spend. A vital part of a strong ESG strategy is monitoring spend to determine where there’s room for improvement. In some cases, you might find that you’re allocating large amounts of money to a handful of “popular” categories, while shortchanging others that could help you to meet goals faster. By knowing exactly where your budget is going, you can identify additional categories that lead to better sustainability and social justice.

With the help of an ESG strategy supported by effective tactics and strong supplier data, your organization can meet goals and make a difference in the community. Take a look at your current processes, compare them to the above list, and ask yourself: Where I can make impactful change?

Stephany Lapierre is chief executive officer of Tealbook.

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About the Author

Stephany Lapierre is the Founder and CEO of Tealbook. A lifelong entrepreneur, Stephany is one of SCMA's 100 Influential Women in Canadian Supply Chain and has won many awards for her innovative approach to supplier intelligence. Prior to tealbook, Stephany built a successful procurement consulting firm focused on helping Fortune 500 companies improve strategic sourcing efficiencies. For more than a decade, Stephany was exposed to the costly and inefficient gap between enterprise buyers and suppliers. In 2014, she launched Tealbook to disrupt the business-to-business directory model by building the largest, most robust and trusted B2B network. Her innovative vision is for Tealbook to enable all companies to connect and find one another with more trust in order to drive their business forward.

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