ESG as a value driver
ESG goes beyond risk mitigation and can drive real value. This was the consensus at Inflexion’s recent ESG Exchange, which invited the portfolio to share experiences in this key area.
Driving a successful ESG programme requires authenticity and a switch in mindset to be impact-driven. Inflexion ESG Director Jennie Galbraith spoke with Melissa Barrett, Global Head of Sustainability Services and Corporate Impact at dss+; Alexandra Florea, Head of Sustainability at Medik8; and Duncan Ross, Chief Data Officer at Times Higher Education.
As an impact consultant with high-level visibility, do others still deem ESG mere risk mitigation?
Melissa – There is a lot of variation, as mentioned while there is lots of activism about sustainability alongside increased regulation, so there are a few things happening around risk. However, if you’re in tech for example, there is so much opportunity to use your solutions in the product space and it’s exciting a lot of companies. On the other hand, mining and chemicals companies are looking at the green transition and this includes both risks and opportunities around their own sector.
To this group, if you look at ESG too widely, you can be overwhelmed and feel there is too much. It’s about focusing down on your material topics and issues.
THE has a mature ESG offering in the market. How did you approach this and what’s it done for THE?
Duncan – Curious about universities’ impact on the world, my research led me to SDG 9 and the more I explored this, the more I realised the sustainability machine made absolute sense in the university sector. No one else was looking at this so we started assessing the opportunity. We created a theory of change and got 540 universities volunteering information to help us do rankings. Now we have over 1,700 universities. It’s the largest assessment for higher education sustainability around the world and helps universities to understand how to move forward; it also gives us visibility we didn’t previously have.
Are consumer businesses leading customers or being led by them on ESG?
Alexandra – I like to think of customers in three buckets (with varying percentages) – eco-warriors who are values-led, a second group who wants to do the right thing but trust us to do it for them behind the scenes, and the third group for which sustainability does not feature as a criteria at all. At Medik8, we aim to serve all three groups of customers: meet the red lines for eco-warriors, provide trust for the second bucket and meet the needs of the last group with efficacious products. So if we make a great product that works and provides a great experience, which is also low impact or even regenerative, we’re creating value for our customers, however they define it. And the key to this is communicating genuinely, and meeting the customers where they are.
Does an ESG framework apply in an economic downturn?
Alexandra – You can’t rip up your values in a cost-of-living crisis. The journey means that sometimes you go fast and other times you slow down, but you must carry on towards your ESG targets. People don’t buy something simply because it’s ‘sustainable’ - however they choose to define that - but sustainability can be the stickiness in the purchase decision and why they come back.
Melissa – more than ever, it’s about people and the belief system we have around ESG and sustainability. Everyone agrees you need the leadership buy-in, but it needs to be genuine and doesn’t pause for a month but is consistent. Knowing what’s driving sustainability in the organisation is important and knowing the levers for change so as to keep it alive in the organisation.
What has been the impact of an enhanced focus on ESG issues?
Duncan – It can be very hard to get data, but when it came to sustainability rankings, universities seemed incredibly eager to provide it, from the management down to student level. This eagerness to provide data may be a generational matter, with leadership in universities very different demographically to the student base, and it may be the students that helped drive this.
Alexandra – Our B Corp application got the whole company on board because it’s so comprehensive, touching on most departments. It also proved a massive engagement exercise, something that got everyone excited. It drove improvements in a lot of areas, with our benefits offering a prime example. Our Chief People Officer used B Corp requirements as a best practice example, resulting in a great benefits offer for our employees, existing and new. In addition, it helped with recruitment as we know our benefits have been benchmarked against the highest standard.
Melissa – To add to this, it means involving and leveraging people. It’s not just about ticking boxes, but about genuinely running an inclusive culture as it brings new ideas and more. Think about ‘what’s the value creation piece for me?’ since it’ll be different for each business and function.
Have any learnings made you wish you had done something differently on the journey?
Duncan – Our challenge is that we’ve been very outwards looking but I think we should focus more on inwards.
Alexandra – Personally I feel we could talk to our teams more, but the past year has been very focused on data baselining and looking for practical wins. We now need to dive deeper into the why and how each team can contribute towards our ESG targets.
Melissa – Building awareness and engagement early, while doing basic 101 education across our organisation and I wish we’d engaged everyone sooner.
Inflexion actively supports its portfolio companies to advance their ESG journeys. A centralised ESG centre of expertise provides frameworks, guidance and training to support portfolio companies in addressing carbon, diversity and other material ESG risks and opportunities. Performance is continually monitored, and companies receive bespoke feedback to encourage value creation across all aspects of E, S & G.
All Inflexion portfolio companies, regardless of size or ownership stake, have full access to our value acceleration resources covering digital enhancement (including data, AI, technology, cybersecurity and digital marketing), international expansion, M&A, ESG, commercial strategy and talent management.