The Rising Tide Of ESG Questionnaires
B2B companies find themselves grappling with an ever-increasing number of complex ESG questionnaires. Whether they arrive with a Request for Proposals (RFP) or as an unexpected request from an existing client, these inquiries are a testament to the growing importance of sustainability in the business world. The challenge intensifies when companies lack a structured system for responding to these questionnaires and, subsequently, fail to provide compelling answers.
This challenge is not going away. If anything, it will escalate. Companies (including your prospects and clients) are collecting data on their supply chains to bolster their sustainability reports — driven by both market demand and impending regulations. In this landscape, having robust answers to ESG questions is not just about compliance. It’s a strategic move to stay competitive.
Turning Challenges Into Opportunities
Smart, strategic choices can transform the ESG questionnaire conundrum into an opportunity for growth and differentiation. Focus on building a sustainability program that aligns with your company’s maturity and risk profile. If you are just getting started, here are a few actions for 2024:
- Leadership Training On ESG/Sustainability
The first step is crucial — training your leadership team on ESG fundamentals. Leaders need to have a solid understanding of ESG and sustainability to effectively communicate with investors and clients. This step not only fosters internal commitment but also positions your company as one that takes these issues seriously.
- Climate Action
Climate is at the forefront. Complete a high-quality carbon footprint measurement that can be shared publicly. This not only provides valuable data but also sets the stage for tangible actions to reduce your environmental impact. And without this, any ESG program you start will lack credibility.
- ESG/Sustainability Policies
Formalizing your commitment to ESG through policy documents will check a lot of boxes on most questionnaires. It demonstrates that you have thought about the issues and committed to addressing them. Policy documents do not have to be long, but they should cover key topics like ethics, climate, human rights, and DEI. These documents can become a reference point for internal decision-making and an asset when clients inquire about your sustainability practices.
- ESG/Sustainability Governance
This is not a temporary blip. You won’t be able to “solve ESG” with a one-time push. Companies have made commitments in this area extending to 2050, and sustainability measures are becoming mandatory for the private sector under emerging regulations. Your company needs a permanent sustainability leadership approach to ensure that you keep pace as this area continues to evolve. Identify an executive who is responsible for reporting to the leadership team and the board on ESG issues and progress and provide a budget. Ensure this executive has cross-functional support. Setting up proper ESG governance will help ensure transparency and facilitate a systematic approach to addressing ESG concerns and tracking improvements.
The Road Ahead
If you start now and take consistent steps, you will be amazed at what you can accomplish in a year. Incremental progress, guided by a clear commitment from leadership, can lead to long-term positive impacts on your company’s reputation, stakeholder relationships, and overall sustainability.
In a business landscape where ESG considerations are becoming a competitive differentiator, your ability to provide thoughtful, meaningful responses to ESG questionnaires is critical. It’s not just about compliance; it’s about demonstrating your company’s commitment to responsible and sustainable business practices. So, equip your team, measure your impact, document your policies, and establish oversight — these steps will not only prepare you for the current wave of ESG questionnaires but position your company as a leader in the evolving landscape of sustainable business.
Christine Uri is a Top 100 Voice in Sustainability. She advises general counsel on the development and implementation of environmental, social, and governance (ESG) programs. As a former Chief Legal Officer and Chief Sustainability Officer for a global sustainability company, Christine knows what it takes to move ESG to the top of the corporate agenda. Christine believes that improving corporate performance on ESG measures is critical to building a more sustainable world. She is passionate about inspiring and empowering in-house legal teams to provide ESG leadership. You can follow Christine on LinkedIn.