We see the integration of Environment, Social and Governance (ESG) into business operations as a common thread within the Corporate Sustainability Reporting Directive (CSRD). Seeing the CSRD as more than just an obligation creates an opportunity to create real impact. To do this, however, ESG must be an integral part of day-to-day operations. How do you do that? How do you implement ESG in your organisation and how do you ensure the change is permanent?
In this article, which is a short summary of the handbook written by Empact for Sdu, we present our science-based change process in 10 clear steps. Successfully implementing these steps ensures that ESG not only becomes part of formal organisational processes, but also of an organisation’s culture and identity. This way, thinking in terms of impact becomes evident, which is a prerequisite for creating real impact.
ESG implementation roadmap
Implementing lasting change is always a challenge. This is all the more true for organisations, where not only people need to change, but also processes, systems and culture. There is no manual that prescribes exactly how to shape this transition. However, we do know from research – such as Schouten, Rousseau and De Cremer (2018) – and experience which steps are necessary to successfully change an organisation. At Empact, we therefore use the following 10-step plan:
| The 10 steps for successful organisational change |
| 1. Assess the opportunity or problem motivating the change. |
| 2. Select and support a leading change coalition. |
| 3. Formulate a clear and compelling vision of the ESG change. |
| 4. Communicate the vision. |
| 5. Activate energy for actual change implementation. |
| 6. Empower others to act. |
| 7. Develop and promote knowledge and skills related to change. |
| 8. Identify short-term successes and use them to reinforce progress in change. |
| 9. Monitor and reinforce the change process over time. |
| 10. Institutionalise change in corporate culture, practices and management succession. |
Step 1. Motivate the change
Mapping risks, opportunities and impacts with a double materiality assessment provides a longlist of themes. This provides a great starting point to clarify the need for change and motivate directors and stakeholders. Not all ESG themes, risks and opportunities will be immediately recognised by (internal) stakeholders. Therefore, a thorough description of issues is essential to add. This requires facts and data, which often come from external sources.
Step 2. Select and support a leading change coalition
Change sometimes start with one person, but is always achieved together. Especially with ESG changes, having a group of drivers – a coalition of change – is crucial. This coalition ensures that enough people and resources are deployed to shape the change process. An important part of the composition of the coalition is internal credibility. Therefore, ensure that the coalition consists of enough senior managers and, in large organisations, that a board member (preferably the CEO) also becomes part of the group of drivers.
Step 3. Formulate a clear and compelling vision of ESG change
Clearly articulating what ESG means for an organisation is becoming increasingly strategic for success. An ESG vision and ambition must convince internally to activate both the upper and lower currents within the organisation to make lasting change. The challenge is to create a vision that both sets a goal and leaves room for flexibility and individual initiatives. In doing so, it is very important that the vision not only shows ambition and is achievable, but also is emotionally appealing.
Step 4. Communicate the vision
How the vision is communicated is key to creating attention and support for the change. In our view, the following six issues are particularly important:
- Accessibility of the vision: Make sure that different levels understand what the vision means, including a practical translation.
- Remembering the vision: Ensure recognition without simplifying the vision. A good example is VodafoneZiggo. They use People Planet Progress for all their internal and external ESG-related communication.
- Seize future opportunities: See what the vision will bring and what the dot on the horizon will be.
- Deploy multi-channel: Make use of different communication channels.
- Role of change coalition: Involve the change coalition in communicating the vision. Role models can also work well here, if they can turn words into action.
- Informal communication: For example, visible posters or flyers by the coffee machine or the canteen, but also consider organising working groups or info sessions.
Step 5. Activate energy for actual change implementation
Concrete goals help to make clear what the results of the vision should be, but that by itself does not yet move the organisation forward. After all, even the organisation’s management may not be ready yet to embrace the change. Planning what needs to change then helps to translate the concrete goals into action plans, operational decisions and responsibilities. Roadmaps and readiness assessments can be used for this, depending on the type of organisation.
Step 6. Enable others to act
Within this step, employees are central to taking actions linked to the established ESG vision. This creates more ownership and encourages actual change. Managers and possibly project and working groups provide coaching and support to employees. Various tactics can be deployed, such as personal appeal (“I really need you”) or negotiation tactics.
Step 7. Develop and promote knowledge and skills related to change
Developing knowledge and skills related to the desired change will increase understanding of the vision and drive the desired change. Possibly, training or other forms of work can be used. But when an employee’s current work is not directly related to ESG, training will not lead to taking ownership and actually changing the work. Team workshops can then be a good option, but again the manager is essential to provide room for making mistakes and learning from them. Sufficient time is also needed for this.
Step 8. Identify short-term successes and use them to reinforce progress in change
Successes are indispensable in ESG change. Celebrating successes helps, but they must be real successes; not greenwashing. Short-term victories not only strengthen the situation, but also show that the vision can be implemented in practice. At the same time, short-term victories help convince cynical employees of the feasibility of the change.
Step 9. Monitor and reinforce the change process over time
Maintaining focus is a necessity to manage the change. On the one hand, this means continuing to invest resources in the change process to remind people of the urgency of the change and keep this pace moving. On the other hand, it means a sustained focus on monitoring and reinforcing the change process by making adjustments to the change plans.
Step 10. Institutionalise change in corporate culture, practices and management succession
By linking change to the increased success of the organisation, ESG is also increasingly recognised internally as a way to improve impact. Again, the coalition of change plays an important role in communicating this. ESG then becomes a prominent part of key communications regarding results, rather than an afterthought.
In this final step of ESG implementation, ESG becomes the organisational norm. Part of an organisation’s formal and informal culture. This is a process of years; publishing a CSRD annual report is just one of many building blocks to get here.
Action and Impact
Want to know more about the 10 steps to lasting ESG change? Then also check out https://www.sdu.nl/shop/jes-knowledge.html for a further in-depth look at this topic. Or would you like more information on how we at Empact can help you? Get in touch today.