Why businesses should link their diversity and inclusion and ESG strategies

Companies that focus on interconnected policies that address inequality and improve sustainability will reap the biggest rewards, says Teresa Boughey

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In 2015 the United Nations General Assembly sent out an urgent call for action to all countries. They believed that if we are to tackle the world’s biggest challenges, we must come together to collectively bring about change. So they identified 17 sustainable development goals (SDGs) and set a timescale to achieve them by 2030. These goals recognised that to end poverty and deprivation we must also focus on interconnected strategies for reducing inequalities, and improving education and health. At the same time we should enhance economic growth, tackle climate change and preserve forests and oceans.

While anything may have seemed possible back in 2015, we are now living in times when little appears certain. In the past three years we have experienced a significant reversal in the progress of the SDGs as a result of the Covid-19 pandemic. It has shone a brighter light on health inequalities, created wider gaps in education and altered the economic landscape. Simultaneously, we have witnessed fires that have devastated forests, wildlife and communities, and the summer of 2022 saw parts of the globe reach record temperatures, impacting on water and food supplies. The Sustainable Development Goals Report 2022 — SDG Indicators highlights grave concerns regarding the reversal of previous progress. 

It is therefore unsurprising that environmental, social and governance (ESG) considerations have risen to the top of boardroom agendas. The dichotomy for many leaders, however, is maintaining focus and momentum of ESG initiatives when other, perceived more important, business priorities take over. According to McKinsey, industry benchmarks show that, in some sectors, nearly 100 per cent of companies have defined and shaped sustainability strategies, yet only 40 per cent have sufficient internal knowledge and capabilities to achieve their targets.  

It is the same when it comes to diversity and inclusion. Organisations often make lofty statements around their ambitions yet fail to tackle inequalities and provide the necessary support, resources and funding to bring about meaningful change.

Consumers, employees, investors and stakeholders alike are all starting to demand something different. Consumers demand more sustainable products and services, and are using their purchasing decisions to send messages to organisations that are lagging behind. Employees want to belong to organisations that value their uniqueness, but also unite their collective desire to have a greater impact on wider society. They are therefore choosing where to work based on the alignment of an organisation's purpose and the impact it has on the planet.

Businesses continue to view these as separate issues. Yet, what is required is a capacity for purpose-driven change that tackles our most important problems head on. Here are five ways to kickstart your company’s journey: 

Take stock and evaluate the current positionBring data together on areas such as your environmental and social impact and explore these in the wider context of your inclusion ambitions. What is the data telling you? What metric will move the needle when it comes to achieving your ESG goals?

Raise awareness about company purpose – Does your company’s purpose refer purely to financial returns, or does it state how the organisation intends to deliver a positive environmental and social impact? How is the business’s purpose brought to life through everyday actions?

Inspire and involve everyoneEnsure everyone is clear about the role they play when it comes to creating a sustainable inclusive impact. Create psychologically safe spaces where people can come together to share their concerns, hopes and aspirations, and co-create a more impactful future.

Build infrastructure and governance for the future Board and senior leaders should be equipped with the skills and know-how around key areas such as diversity and inclusion and ESG. Do they see these as another ‘task’ or do they understand the pivotal role they play in shaping an inclusive, sustainable organisation?

Embed diversity, inclusion and sustainability initiatives Initiatives are most effective when they are continually reviewed, refined and improved year on year. Employees and consumers are astute, they recognise and know when organisations approach such important issues through tokenism, empty pledges and greenwashing. 

According to the 2015 Nielsen Global Sustainability Report, 66 per cent of people (and 73 per cent of millennials) are willing to pay more for products and services from companies committed to positive social and environmental impact. Similarly, research shows that 91 per cent of global citizens are interested in hearing about corporate social responsibility initiatives, but messages must be honest and clear. Consumers trust companies' environmental claims more when backed up by certification marks and when ingredients are responsibly sourced. It's important therefore to make sure the actions and the words go together.   

Businesses that will thrive and gain market share will not be the ones with the biggest bank balances, but the ones making the biggest difference to their people by solving the world’s biggest problems. Therefore, aligning ESG with an organisation's ambition for inclusion is one of the biggest business opportunities of our time. Organisations that do this will provide more inclusive and meaningful work opportunities, create more innovative products and services and have a positive impact on communities. They will also unlock deeper returns for their investors. 

At a time when social sustainability, equality, diversity and inclusion is of paramount importance, these companies will drive positive change and, in turn, will reap the biggest rewards.

Teresa Boughey is CEO and founder of Jungle HR, founder of Inclusion 247 and author of Closing the Gap