It’s as easy as ESG: beware, the devil is in the detail.

Environmental, Social and Governance (ESG) — it’s the latest three-letter (buzz)word taking every organisation by storm. But this seemingly simple acronym conceals a plethora of complexities beneath its surface.

So, let’s break it down — what is ESG?

• “E” focuses on preserving the planet, reducing carbon emissions, and conserving resources;
• “S” centres around embracing and encouraging diversity, championing social justice and community impact; and
• “G” is all about transparency, accountability, and making sure the decision-makers play by the rules.

The combination of these three intertwining pillars help shape responsible business practices.

The rise of ESG strategies and their purpose

Put simply, ESG captures the non-financial factors that investors and stakeholders are increasingly relying on to assess risk management and identify opportunities in organisations.

But those of you who have been in the game for a while will be familiar with another famous trio of letters — Corporate Social Responsibility (CSR). Whilst there is some overlap, CSR generally focuses an organisation’s internal culture and values; making up the “S” in ESG.

The two terms are often used interchangeably which can cause confusion, but with tightening expectations around environmental sustainability, it’s important to recognise the difference. In some way, ESG lends a measurable and credible hand to the broader CSR philosophy and framework, enabling organisations to navigate the path towards long-term sustainability with measurable outcomes.

PWC’s report found that ESG-focused institutional investment is set to soar 84% to US$33.9 trillion in 2026, making up 21.5% of assets under management. So, it’s easy to see why it’s all the rave! ESG = huge returns.

Naturally, this excitement has led to every organisation publishing an ESG strategy and phrases like “net zero” “corporate responsibility” and “long-term gain” being bandied around quicker than you can say “greenwashing!”

But, with great buzzwords comes great responsibility.

Your organisation’s ESG strategy should be a tool for mitigating risk, attracting sustainable investment, and creating a positive legacy that extends beyond quarterly reporting.

Reality Check: is your ESG strategy achievable?

ESG strategies require realistic goal setting. Whilst setting ambitious targets is commendable, they must align with your organisation’s culture and resources.

McKinsey’s Global Survey reported seven traits that set organisations apart when looking at ESG. Respondents who reported increased impact generally concluded that their organisations’ focus on both protecting and creating value was integral.

Consult with your business and assess whether your ESG commitments are attainable, feasible and integrate with your existing practices — it’s not just about talking the talk; it’s about walking the walk.

We’ve all heard the age old saying “what gets measured gets done” and ESG is no different. If you cannot measure your impact, it’ll be harder to drive any type of engagement and maintain traction.

Navigating the nuances of ESG considerations

It isn’t a one-size-fits-all solution. Every organisation is on its own journey and will have different objectives depending on their industry, sector, and geographical spread. It’s important to note that not all organisations prioritise the elements of “E” “S” and “G” in the same way.

Some common threads to consider include supply chain management, product lifecycle assessments, stakeholder engagement, and regulatory compliance. Be sure to cultivate a comprehensive understanding of the complexities involved and foster a culture that embraces, demonstrates and promotes equitable practices, from the boardroom to the front line.

Shaping your ESG journey

All for one, and one for all! ESG is truly a team effort. Consult with your employees and external stakeholders. Your internal business services functions play a crucial role in developing, implementing, and regulating ESG objectives and the overall strategy.

For example, your in-house legal counsel can assist in developing the legal and governance ESG framework, mitigate risk and guide decision making. In collaboration with others, such as internal audit and HR, you can achieve a truly joined up approach.

It’s all about culture, communication and commitment.

That’s all for now

The World Economic Forum’s Global Risks Perception Survey put environmental factors as the most critical threats to the world over the next 10 years. This is hardly surprising, but it’s another firm call to action.

ESG is presenting a huge paradigm shift in business practices. Whilst the devil lies in the detail, by embracing realistic and measurable ESG strategies organisations’ can unlock its true potential and drive significant environmental impact.

When it comes to ESG, it’s not just about being on trend — it’s about shaping a better future, one three-letter acronym at a time!