An effective ESG strategy and governance foster innovative solutions in the market

Companies often view their ESG strategy as something disconnected from their overall business strategy. Ann-Françoise Versele of Bekaert and An Vanderhulst of KPMG in Belgium explain how integrating both can effectively bridge the gap between theory and practice.

In the past decades, those seeking to gauge a company's sustainability efforts would often turn to its annual reports. Yet, with diverse reporting approaches across ESG pillars such as climate, human, and societal impact, comparing organizations proved challenging.

That will soon change with the CSRD. “This European directive obliges companies to transparently report on their ESG initiatives. Moreover, it requires more detailed reporting, enabling a more critical examination,” says An Vanderhulst, Director Principal Enterprise Risk & Assurance at KPMG Belgium.

Large companies are the first ones who have to report according to the rules of the CSRD. Many of them still have work ahead of them, notes Vanderhulst. "Many companies strive to be compliant by the deadline, but there is still a significant shift needed to integrate all of this into their daily operations. Often, they still consider corporate strategy and ESG strategy as two separate things.”

At steel wire specialist Bekaert, where Ann-Françoise Versele serves as Global Head of Sustainability, this isn't the case. “We have been reporting on sustainability according to the applicable standards since 2011, so the switch to the CSRD is a logical next step. The CFO, COO, auditors, and I are among those contributing to this report. Each of us takes charge of a section of the annual report, but sustainability is a collective focus.”

ESG reporting is a team effort that takes into account internal controls and processes. Vanderhulst explains: “You need to define the indicators you report on and determine the most efficient way to compile that data. This requires solid governance so that you're sure what you're reporting is correct and consistent. Currently, many companies can't extract that data from the system with the push of a button, which increases the need for strong processes and controls. Additionally, culture is also a crucial aspect. Sustainability goes beyond compliance or marketing; it must be embraced internally and become part of the organization's mission to achieve effective results. You can't introduce that overnight; it must grow gradually."

A focus on sustainability also drives value creation. “A well-developed ESG strategy impacts your reputation and helps attract talent. It also allows you to cut costs, work more efficiently and bring innovative solutions to market,” Versele explains.

In recent years, Bekaert has developed a number of products that generate a positive impact for customers and society. Versele: "Think of Dramix®, a solution for concrete reinforcement that requires less steel and cement. Another example is Ampact™, our solution for electric motor winding in battery vehicles. This copper wire with innovative coating allows electric cars to become more efficient and charge faster. Such products are the best proof that by focusing on sustainability you can also tap into new markets. By allowing managers to lead by example and empowering business units to make decisions, everyone is on board, enabling us to gain a significant advantage.”

This article was created in collaboration with De Tijd and L'Echo.