We see the integration of Environment, Social and Governance (ESG) into business operations as a common thread within the Corporate Sustainability Reporting Directive (CSRD). Viewing the CSRD as more than just an obligation creates an opportunity to create real impact. This does require making ESG an integral part of day-to-day operations. How do you do that? How do you implement ESG in your organization and make sure the change is permanent?
In this article, which is a brief 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 organizational processes, but also of an organization’s culture and identity. In 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 organizations, where not only people must change, but also processes, systems and the culture. There is no concrete 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 needed to successfully change an organization. At Empact, we therefore use the following 10-step plan:
| The 10 steps to successful organizational 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 ESG change. |
| 4. Communicate the vision. |
| 5. Activate energy for actual change implementation. |
| 6. Enable 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. Institutionalize change in corporate culture, practices and management succession. |
Step 1. Motivate the change
Mapping risks, opportunities and impacts with a double materiality test provides a long list 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 immediately be recognized 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
Changes sometimes start with one person, but are always realized 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 dedicated to shaping the change process. An important part of the composition of the coalition is internal credibility. Therefore, ensure that the coalition consists of enough senior executives and, in large organizations, that a board member (preferably the CEO) also becomes part of the group of boosters.
Step 3. Formulate a clear and compelling vision of ESG change
Clearly articulating what ESG means to an organization is becoming increasingly strategic for success. An ESG vision and ambition must convince internally to activate both the upper and lower currents within the organization 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 appeals emotionally.
Step 4. Communicate the vision
How the vision is communicated is critical to creating attention and support for the change. In our view, the following six issues are particularly important:
- Accessibility of the vision: Make sure the different levels understand what the vision means, including a practical translation.
- Remembering the vision: Dedicate recognition without simplifying the vision. A great example is VodafoneZiggo. They use People Planet Progress for all their internal and external ESG-related communications.
- 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 change coalition: Involve the change coalition in communicating the vision. Role models can also work well here if they can put words into action.
- Informal communication: For example, visible posters or flyers at the coffee machine or cafeteria, but also consider organizing working groups or info sessions.
Step 5. Activate energy for actual change implementation
Concrete goals help make clear what the results of the vision should be, but that by itself does not yet move the organization forward. After all, even the management of the organization may not yet be ready to embrace the change. Planning what 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 purpose, depending on the type of organization.
Step 6. Empower 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 any project and working groups provide coaching and support to employees. Various tactics can be employed, 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 ability 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 reinforce 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 maintain this pace in motion. 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. Institutionalize change in corporate culture, practices and management succession
By connecting change to the increased success of the organization, ESG is also increasingly recognized 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 organizational norm. Part of an organization’s formal and informal culture. This is a process of years; the publication of a CSRD annual report is just one of many building blocks to get here.
Action and Impact
Want to learn more about the 10 steps to lasting ESG change? Then check out https://www.sdu.nl/shop/jes-knowledge.html for a more in-depth look at this topic. Or would you like more information on how we at Empact can help you? Get in touch today.