Let’s talk about ESG
Environmental factors
Social factors
Governance factors
Environmental factors
Consumer facing businesses are at the forefront of environmental scrutiny. From production to packaging, logistics to waste – consumer businesses are looking to reduce plastic and cut carbon emissions throughout the supply chain. Companies realise that the "E" is bigger than climate change, with carbon emissions, biodiversity and the circular economy all cited as factors driving strategic change in our recent report.
Innovation is driving fast paced change in this space. From the use of AI and Blockchain for tracking goods along the supply chain to the overhaul of fleets to electric vehicles – consumers are demanding change and will boycott brands which don’t meet their ethical or environmental expectations.
Brands that have been quick to meet these expectations are reaping benefits as often there are cost savings tied into energy and environmental efficiency. However it’s not all positive, there are risks involved. For example greenwashing (the phenomenon where a product or business is marketed as eco-friendly, green or sustainable when this is not the case) is a tricky line for brands to walk. View more about the pains and pitfalls here >
Similarly electric vehicle charging points are proving a challenge for retail and hospitality outlets. We are supporting many clients as they struggle with developing a new site, as these charging points are becoming a planning condition and often need extra commitments in terms of servicing and ensuring the right infrastructure is in place.
Social factors
Last year we talked about the impact of #MeToo and Black Lives Matter which continue to drive behaviours and change within society. The focus on diversity, inclusion, culture, well-being and mental health issues is now engrained in the consciousness and a top priority for both consumers and employees. It is essential for leaders to create an inclusive and prosperous environment for their employees, customers, suppliers, shareholders, investors and communities.
67% of the consumer businesses that we surveyed said they had implemented or were considering implementing a diversity policy, strategy or targets.
A leader’s legal and ethical duties of ensuring that their business and employees act in a responsible and accountable manner are now a commercial imperative. Working for an organisation with a genuine commitment to a values-led purpose and conscience is an increasingly important prerequisite for top talent. We have seen brands getting it wrong such as Brewdog who are at risk of losing their 'B Corp' status due to alleged culture issues. The brand damage and personal liability is increasingly common where businesses fail to address ethical behaviour.
As one of the global economy's largest employers, people issues in the consumer sector are of paramount importance. The idea of a ‘living wage’ and the thriving, yet controversial, gig economy are key concerns. View our ‘people, employment and the global landscape’ trends article to find out more >
Governance factors
Our research showed that consumer businesses more than any other face the challenge of lack of ownership of the ESG agenda within their business. Things are starting to change but there’s a real opportunity for legal leaders to drive change. From privacy (take a look at our Data protection – managing your marketing and cookies article) to modern slavery, Board structure and remuneration to business ethics – there is a lot to consider and act upon.
Insights from our recent roundtable with consumer sector leaders looked at how businesses are preparing for the implementation of the UK plastic packaging tax and the Scottish Deposit Return Scheme (which we have now been informed will go live on 16 August 2023). It's easy to see how the myriad of issues and layers of complexity just to implement these reforms in one jurisdiction are only heightened when looking at a global business with different rules and regulations. Read about how consumer businesses are tackling the horizon scanning challenge as the regulatory landscape continues to evolve >
We have only scratched the surface of the complex ecosystem of change that 'ESG' creates. We believe ESG is here to stay and not simply the latest trend or 'buzzword', businesses who fail to make business critical positive changes will be left behind in the eyes of their employees and consumers.
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