ESG Change Management

Successful businesses have always embraced change to remain competitive and grow. ESG is the defining challenge of our time and will require wide and deep changes across the market.

Organisations have never been in a better position to unlock their potential through their people. We are operating in a constantly and rapidly changing world which has presented unprecedented challenge for businesses, such as the accelerated demand for ESG related factors.

There is a requirement for organisations to become more flexible and responsive, to constantly integrate new technologies, to operate in risky, costly and more complex environments. This in turn creates opportunities.

IT systems can play a vital role in the promotion of ESG strategies. At a base level, IT enables the transparency of data relating to a company’s ESG indicators.

This data can be made available to stakeholders on an online platform where it can be continuously updated. This ESG data often includes metrics on environmental impacts and commitments and workplace diversity and inclusion, among others.

IT systems can provide an optimal solution for emissions reductions though the use of cloud computing technology. Other sustainable IT solutions, such as energy efficient lighting and heating, vehicle route optimisation, and digital twin technology all represent opportunities for sustainable enhancement in the workplace.

Many companies that are paving the way forth on the sustainability agenda have been driven by a number of factors, such as competitor activity, operational efficiencies, and the introduction of new regulations such as Ireland’s Climate Action Plan 2021.

Effective ESG change management recognises that the ownership of sustainability related matters is not a top-down approach, but rather the responsibility of all employees across a business.

In order to achieve an impactful sustainability strategy, it is essential to develop a sustainable workforce that shares the same vision about their company’s impact on the environment and climate change.

Divestment refers to the reduction of investment of assets which can support negative impacts on the wider ESG agenda, such as fossil fuels, unethical stocks, and unsustainable political objectives.

Divestment can create significant downward pressure on the valuation of such assets, creating a stigmatised image and diverting company investment in alternative sectors, such as renewable energies.

Moreover, divestiture in the context of ESG can play a crucial role in modelling a company’s business portfolio and ensuring long-term profitability.

The ESG agenda is continuously impacting how M&A is conducted. Sustainability is increasingly becoming an imperative element of deals and is taking a more prominent place in the boardroom on such acquisitions.

Moreover, higher levels of technology and date on EDG factors are enabling dealmakers to easily access metrics that assign values to ESG factors.

Examples of these include GHG emissions, climate-related insurance costs, social indicators (such as employee retention and productivity), and demand for products/services with a positive social/environmental characteristics.