Introduction:

In today’s business environment, organisations must go beyond traditional strategies and embrace a broader set of considerations to earn a social license to operate. This article aims to outline the essential steps and minimum ESG (environmental, social, and governance) principles that employers should incorporate into their strategy-setting process to ensure compliance with a social license to operate. Drawing on reputable sources such as Harvard Business Review and other serious publications, we will explore how organisations can align their strategic objectives with societal expectations.

 

Step 1: Assess and Understand Stakeholder Expectations:

The first crucial step in strategy setting with an ESG focus is to assess and understand the expectations of stakeholders. This involves identifying key stakeholder groups, such as employees, customers, communities, and investors, and actively engaging with them to gain insights into their ESG concerns and priorities. By listening to and incorporating stakeholder perspectives, organisations can ensure that their strategies address relevant social and environmental issues.

Step 2: Identify Material ESG Issues:

Once stakeholder expectations are understood, the next step is to identify the material ESG issues that are most relevant to the organisation’s industry and operations. Materiality assessments help organisations determine which ESG factors are most significant in terms of their impact on the business and their relevance to stakeholders. This process ensures that strategy-setting efforts are focused on addressing the issues that matter most to both the organisation and its stakeholders.

 

Step 3: Embed ESG Principles in Corporate Governance:

To comply with a social license to operate, organisations must integrate ESG principles into their corporate governance framework. This involves establishing clear accountability structures, creating board-level oversight of ESG matters, and aligning executive incentives with sustainable performance metrics. By embedding ESG principles in corporate governance, organisations demonstrate their commitment to responsible decision-making and transparency.

 

Step 4: Define Minimum ESG Principles:

Defining minimum ESG principles provides a framework for organizations to follow in their strategy setting. These principles should encompass the fundamental areas of environmental stewardship, social responsibility, and ethical governance. For example, organizations may commit to reducing carbon emissions, promoting diversity and inclusion, ensuring supply chain transparency, and upholding high standards of business ethics. These minimum ESG principles serve as a foundation for sustainable and responsible business practices.

 

Step 5: Set Clear Goals and Key Performance Indicators (KPIs):

To effectively implement an ESG-focused strategy, organizations must set clear goals and establish measurable KPIs. These goals should align with the identified material ESG issues and be integrated into the organization’s overall performance management system. By setting specific, measurable, attainable, relevant, and time-bound (SMART) goals, organizations can track their progress, demonstrate accountability, and continuously improve their ESG performance.

 

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Achieving a social license to operate requires organisations to integrate ESG principles into their strategy-setting process. By following the outlined steps and incorporating minimum ESG principles, organisations can ensure compliance with societal expectations and contribute to sustainable development. By assessing stakeholder expectations, identifying material ESG issues, embedding ESG principles in corporate governance, defining minimum ESG principles, and setting clear goals and KPIs, employers can establish a robust foundation for a socially responsible and successful business. By quoting resources from reputable publications, such as Harvard Business Review and others, organisations can draw upon well-established research and insights to inform their strategic decision-making and earn the trust and support of their stakeholders.

 

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Greg Weiss

Greg Weiss

Founder and CEO

Greg Weiss is known as one of Australia's most experienced recruitment experts and HR consulting professionals. Greg founded Impactful People helping to create a better world, one placement at a time. 

Greg has helped 100s of businesses with their people needs and coached over 1,200 people improve their careers through Soulidify and  Career365.

If your business employees Gen Z and Millennials, then you need to demonstrate your commitment to how you positively impact on the world. You do that by living through ESG values.  If you want to demonstrate real commitment to ESG through recruiting people who can strengthen that capability, then Greg can show you how.