From Compliance Exercise to Business Strategy: Putting ESG into Practice
ESG (Environmental, Social and Governance) has become a familiar term in boardrooms, but many organisations still grapple with what it means in practice. At a recent joint event with Edinburgh Chamber of Commerce and Edinburgh B Corp 500, we highlighted that ESG can be a practical framework for future-proofing a business: helping organisations make better decisions, manage risk and create long-term value.
The environmental dimension focuses greenhouse gas emissions, waste management, energy use and the transition to net zero. Social considerations cover employee wellbeing, diversity, equity, inclusion and belonging, human rights and engagement with local communities. Governance relates to how organisations make decisions, allocate responsibility and maintain appropriate controls and accountability.
There are some ESG-related legal obligations on businesses in the UK. Depending on the organisation and sector, this may include obligations such as the Energy Savings Opportunity Scheme (ESOS), Streamlined Energy and Carbon Reporting (SECR), modern slavery disclosures and measures to avoid greenwashing.
However, businesses see the greatest benefits when ESG is embedded across the organisation rather than treated as a standalone reporting exercise. The B Corp framework provides a practical route for organisations looking to strengthen their social and environmental impact, encouraging businesses to incorporate ESG principles into governance, operations and decision-making.
The most effective ESG strategies extend across the business, from supply chains and procurement to investment decisions, client relationships, recruitment and workplace initiatives. This approach can deliver tangible results. According to B Lab UK, B Corps report stronger headcount and turnover growth, attract higher levels of investment and have demonstrated greater resilience than many peers in the years following the pandemic.[1]
The success of the B Corp movement highlights a simple lesson: ESG delivers the greatest value when it is embedded into the culture and strategy of an organisation rather than viewed as a compliance exercise.
The message for business leaders is clear: ESG, when embraced with open arms, can potentially pay for itself. This approach not only supports compliance but can also strengthen resilience, reputation and long-term business success.
Joanna Waddell, Of Counsel, CMS, with support from Jack Bell, Trainee Solicitor, CMS. Coordinated by Alison McCartney, CMS, and Neil Small, Edinburgh Chamber of Commerce.
