Often in SMEs ESG matters are handled through separate projects, such as calculating the CO2 footprint, taking part in different responsibility initiatives, or creating the first sustainability report. In addition to this, ESG matters are for example given to the CFO or communications department to be taken care of. These are all good initiatives and the first steps to take things forward. However, even naming a sustainability manager will not do the magic, since the most critical things are still missing – ensuring the continuation and broad motivation.
If you want to make ESG matters and responsibility stick in your organisation, you can’t rely only on a specialist role and individual projects. If ESG is not part of the daily work and management system, it will be buried under the next more urgent topics and slowly forgotten in time.
Making ESG mainly a topic of one expert is also creating a significant dependence on one person and risk. So, either instead or in addition, each management group member should know how they can best affect E, S, and G, and have clear targets that they can take forward to their team members.
How to get started then? Make sure that the topics are discussed in the board and management group, the highest-ranking bodies that discuss the administrative model and compensation guidelines. Make sure that the top management is committed to the targets, as you would do in any other field of business. Make ESG targets a part of the reward system. Incentivising doesn’t always need to mean precise numeral metrics if they are not yet in place, or if they include notable uncertainties. Successful progress in projects or in the steps and phases of the ESG roadmap can naturally also lead to bonuses.
Collecting data and measuring it helps you to set realistic targets and understand the most impactful areas where you can improve (be it CO2 footprint calcs or usually very well-treated work safety KPIs). Systematic goal setting and target reviewing allow credible and responsible communication about sustainability that is not based on gut feeling or general assumptions.
ESG management is even nowadays sometimes experienced as nonsense and something unnecessary. I hope that being as systematic and transparent as for e.g., financial administration, would become an ESG norm as well. We accept thoroughgoing processes and reporting without questioning for example when fighting against the grey market in financial administration. I wish we would start to value also non-financial ESG topics in the same way. So that systematic management of environmental impacts, and the workload it requires, would be accepted as an essential task of good governance in companies of all sizes.
How do you think ESG is best tied to the management system of SMEs? What kind of solutions have you made for managing sustainability in your organisation?