What are the 3 Pillars of Corporate Sustainability?
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In this article, we'll explore what the 3 pillars of corporate responsibility are, why they're important, and how businesses can turn them into practical action.
ESG / CSR
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MEASURE
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How to develop an ESG strategy
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The business landscape is shifting. Companies today are under increasing pressure to adopt sustainable practices, engage meaningfully with stakeholders, and ensure ethical governance. But while Environmental, Social, and Governance (ESG) strategies have become a critical focus for businesses, knowing where to start can feel overwhelming.
Building an effective ESG strategy isn’t just about meeting stakeholder expectations - it’s about creating long-term value for your business while contributing to a more sustainable and equitable future.
In this article, we’ll cover:
What an ESG strategy is and why it’s essential for businesses
The key steps to building and implementing an effective ESG strategy
How to set clear ESG goals, KPIs, and action plans
Common ESG challenges and how to address them
The main frameworks and standards that can guide your ESG approach
What is an ESG strategy?
An ESG strategy outlines a company’s approach to managing its environmental, social, and governance responsibilities. It provides a framework for embedding sustainability and ethical practices into business operations, ensuring that the company addresses issues ranging from climate change to employee well-being and corporate transparency.
Rather than being a standalone initiative, an ESG strategy integrates with the overall business strategy, helping companies manage risks and seize opportunities. For example, prioritising energy efficiency or sourcing sustainable materials can reduce costs while also meeting stakeholder expectations.
A good ESG strategy is proactive, transparent, and measurable. It considers the unique challenges of the business and its industry, setting clear goals that align with global standards like the UN Sustainable Development Goals (SDGs) or the Paris Agreement.
In short, an ESG strategy is a roadmap for building resilience, fostering trust, and driving positive change - both within and outside the organisation.
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Why does your company need an ESG strategy?
In today’s market, a strong ESG strategy is a business must-have. Companies that fail to act risk falling behind competitors, alienating stakeholders, and even facing regulatory penalties.
An effective ESG strategy offers numerous benefits, including:
Risk mitigation
Addressing environmental and social risks – such as supply chain disruptions or regulatory changes – helps safeguard your business against future challenges.
Enhanced reputation
Companies with strong ESG commitments are more likely to attract customers, investors, and employees who value sustainability and ethical practices.
Operational efficiency
Initiatives such as reducing energy consumption or minimising waste can lower costs while supporting long-term sustainability goals.
Access to capital
Investors increasingly favour companies with robust ESG credentials, viewing them as lower-risk and more future-proof.
Beyond these practical benefits, an ESG strategy enables companies to contribute to broader societal goals, such as combating climate change or promoting social equity. Businesses that embrace ESG are not just meeting expectations - they’re shaping a more sustainable future for everyone.
Key steps to developing an ESG strategy
Creating an ESG strategy that drives meaningful change requires a structured and thoughtful approach. Whether you’re starting from scratch or refining existing efforts, these steps provide a roadmap for success:
1. Assess your starting point
Before setting goals, it’s important to understand where your business currently stands. Start with a materiality assessment to determine the environmental, social, and governance issues most relevant to your operations and stakeholders.
A materiality assessment involves identifying the topics that have the greatest impact on your business and are most important to your stakeholders. This ensures your ESG strategy focuses on what truly matters.
Next, gather comprehensive data on your current performance. Key areas to assess include:
Environmental metrics
Carbon emissions, energy usage, waste generation, and water consumption.
Social metrics
Workforce diversity, employee satisfaction, community engagement, and supply chain practices.
Governance metrics
Transparency, compliance, and ethical practices.
Creating a baseline will help you identify strengths, weaknesses, and opportunities for improvement. This step is also crucial for measuring progress over time.
2. Engage stakeholders
ESG initiatives impact a wide range of stakeholders, from employees and investors to customers and local communities. A successful strategy depends on meaningful engagement with these groups to understand their priorities and expectations.
Here are our top recommendations on how to engage stakeholders effectively:
Surveys and focus groups
These tools allow you to collect qualitative and quantitative insights.
One-on-one interviews
Speaking directly with key stakeholders – such as senior executives or community leaders – provides valuable perspectives.
Partnerships
Collaborating with NGOs, industry groups, or academic institutions helps align ESG efforts with broader sustainability goals.
Engaging stakeholders not only ensures your strategy addresses real-world concerns but also builds trust and support for your initiatives.
3. Set clear goals and KPIs
Your ESG goals should be specific, measurable, achievable, relevant, and time-bound (SMART). Setting realistic yet ambitious targets ensures accountability while aligning with global standards like the UN Sustainable Development Goals (SDGs) or Science-Based Targets (SBTi).
Examples of ESG goals include:
Environmental
Reducing greenhouse gas emissions by 30% within five years or transitioning to 100% renewable energy by 2030.
Social
Achieving a 50:50 gender balance in leadership roles or improving employee satisfaction scores by 15% within two years.
Governance
Implementing a transparent supply chain policy or achieving ISO certification for ethical governance.
Break these goals into measurable key performance indicators (KPIs) to track progress. KPIs provide clarity on what success looks like and help demonstrate accountability to stakeholders.
4. Create an actionable plan
An ESG strategy is only as effective as the plan that supports it. Once you’ve set your goals, outline the specific steps needed to achieve them.
Here are some of the key elements of an actionable plan:
Prioritise initiatives
Focus on high-impact areas that align with your company’s values and stakeholder priorities.
Allocate resources
Determine the budget, tools, and personnel required for each initiative.
Assign responsibilities
Clearly define accountability for each part of the strategy to ensure effective execution.
For example, if one of your goals is to reduce emissions, your plan might include:
- Investing in energy-efficient equipment.
- Upgrading to renewable energy sources.
- Implementing a company-wide recycling programme.
The key is to integrate ESG initiatives into everyday business operations, making sustainability a core part of your company’s identity.
5. Communicate your ESG strategy
Transparency is critical for building trust with stakeholders and maintaining accountability. Communicate your ESG strategy and progress both internally and externally.
🏢 Internal communication
🎓 Educate employees about your ESG goals and how they can contribute.
📣 Highlight progress regularly through company meetings, newsletters, or intranet updates.
🌍 External communication
📝 Publish an annual sustainability report using recognised frameworks such as GRI, SASB, or TCFD.
📲 Use your website and social media channels to share updates, successes, and challenges.
Clear and consistent communication ensures stakeholders stay informed and engaged with your ESG journey.
6. Monitor and improve
Developing an ESG strategy is not a one-time exercise - it’s an ongoing process. Regularly monitor your progress, evaluate your performance against KPIs, and adapt to changes in regulations or stakeholder expectations.
Here's how to monitor and improve effectively:
Track performance
Use dashboards or software to visualise data and measure progress in real-time.
Conduct audits
Internal or third-party audits can validate your efforts and identify areas for improvement.
Respond to feedback
Actively seek input from stakeholders and adjust your strategy to address emerging concerns or priorities.
For example, if new regulations require stricter emissions reporting, update your monitoring processes to ensure compliance. Similarly, if a stakeholder survey reveals dissatisfaction with your social initiatives, consider refining your approach.
By staying flexible and proactive, your business can ensure its ESG strategy remains impactful, credible, and aligned with evolving expectations.
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Challenges in developing an ESG strategy
Unfortunately, developing an ESG strategy isn't always straightforward, and it’s not without its challenges. Many businesses encounter obstacles that can slow progress or make implementation more complex.
In this next section, we'll cover some of the most common challenges and give tips on how to effectively address them:
Limited resources
⏳
Small and medium-sized businesses often lack the time, money, or personnel to dedicate to ESG efforts.
Solution
Start small by focusing on high-impact areas and scale up over time. Use tools like Greenly’s platform to streamline processes and reduce costs.
Data gaps
🧩
Gathering accurate data, especially for Scope 3 emissions and supply chain activities, can be difficult.
Solution
Leverage technology and partnerships to bridge data gaps. Use platforms specialising in ESG metrics to monitor performance effectively.
Resistance to change
🧱
Employees or leadership may resist ESG efforts due to uncertainty about long-term benefits or misaligned priorities.
Solution
Educate and communicate with employees and leadership. Show how ESG initiatives align with company goals and highlight the business case for sustainability.
Evolving regulations
📜
Constant updates to ESG reporting requirements can make compliance challenging for businesses.
Solution
Stay informed about regulatory updates and partner with ESG compliance experts to keep your strategy current.
Measuring impact
📏
Quantifying the impact of ESG initiatives, particularly social or biodiversity improvements, is often challenging.
Solution
Develop clear KPIs and use recognised frameworks to standardise measurement. Seek third-party certifications for external validation.
ESG strategy frameworks and standards
Developing a robust ESG strategy can feel overwhelming, but established frameworks and standards provide a helpful starting point. These tools guide you in structuring your approach, setting goals, and reporting progress. Here are some of the most widely recognised ESG frameworks and standards:
Global Reporting Initiative (GRI)
The GRI is one of the most commonly used frameworks for ESG reporting. It provides detailed guidelines for companies to disclose their environmental, social, and governance impacts. The GRI’s comprehensive structure helps organisations identify material issues, track progress, and communicate their performance transparently.
Why it matters: GRI standards are widely recognised, making them an excellent choice for businesses looking to build credibility with stakeholders.
Sustainability Accounting Standards Board (SASB)
SASB focuses on industry-specific sustainability metrics, making it highly relevant for companies operating in sectors with unique challenges. It provides a set of standards tailored to 77 industries, covering material ESG topics most likely to impact financial performance.
Why it matters: SASB standards help businesses align ESG efforts with financial objectives, making it easier to communicate value to investors.
Task Force on Climate-related Financial Disclosures (TCFD) / International Sustainability Standards Board (ISSB)
The TCFD framework for reporting climate-related risks and opportunities has been transferred to the ISSB (IFRS S1 and S2). In October 2023, the TCFD was disbanded, and its recommendations were incorporated into the ISSB standards, which now provide a global baseline for climate-related disclosures. These standards emphasise governance, strategy, risk management, and metrics related to climate.
Why it matters: ISSB standards, built on TCFD principles, are increasingly favoured by investors and regulators. Companies aligning with these standards can effectively address climate-related risks while meeting evolving disclosure expectations.
UN Sustainable Development Goals (SDGs)
The UN SDGs offer a global blueprint for addressing pressing environmental, social, and economic challenges. While not specifically a reporting framework, the 17 goals provide a valuable reference for companies aligning their ESG strategies with broader sustainability objectives.
Why it matters: The SDGs highlight the global impact of your ESG initiatives and connect your strategy to widely recognised priorities like gender equality, clean energy, and climate action
ISO Standards
ISO (International Organization for Standardization) offers various standards relevant to ESG, such as ISO 14001 for environmental management systems or ISO 26000 for social responsibility. These standards provide practical guidelines for integrating ESG principles into business operations.
Why it matters: ISO standards are known for their focus on operational excellence and continuous improvement, making them ideal for embedding ESG into day-to-day practices.
Using these frameworks can help companies structure their ESG strategies effectively, ensuring alignment with global best practices and boosting stakeholder confidence. While no single framework fits every business, combining elements from multiple standards can provide a comprehensive approach tailored to your company’s needs.
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ESG strategy FAQs:
What’s the difference between an ESG strategy and CSR?
CSR (Corporate Social Responsibility) typically focuses on voluntary initiatives such as community engagement or philanthropy, whereas an ESG strategy is more structured and data-driven. ESG integrates environmental, social, and governance factors into business strategy, risk management, and reporting, and is increasingly influenced by regulatory requirements, investor expectations, and the pursuit of long-term value creation.
Do SMEs need an ESG strategy?
While ESG requirements are more formalised for large and listed companies, SMEs increasingly benefit from having an ESG strategy. Supply-chain requirements, customer expectations, access to finance, and future-proofing against regulation are all driving smaller businesses to adopt ESG practices earlier.
How long does it take to develop an ESG strategy?
For many organisations, an initial ESG strategy can be developed within a few months, starting with a materiality assessment and baseline data collection. More complex businesses may take longer as ESG becomes embedded into governance structures, operations, and reporting processes.
How often should an ESG strategy be reviewed?
An ESG strategy should be reviewed at least annually to assess progress against goals, update KPIs, and reflect regulatory or stakeholder changes. Some elements, such as emissions data or risk management, may need to be monitored more frequently throughout the year.
Does an ESG strategy have to include carbon emissions?
Carbon emissions are a central part of the environmental pillar of ESG, but an ESG strategy goes beyond climate alone. It also covers social issues such as workforce practices and supply chains, as well as governance topics like transparency and ethics, although credible ESG strategies increasingly include emissions measurement as a core component.
Is an ESG strategy mandatory in the UK?
An ESG strategy itself is not legally required in the UK, but many ESG-related disclosures are mandatory depending on a company’s size, sector, and listing status. Regulations such as SECR, FCA climate-related disclosures, and upcoming UK sustainability standards mean that many companies effectively need an ESG strategy to meet compliance obligations and respond to investor and stakeholder expectations.
What about Greenly?
Streamlined ESG Data Management & Compliance
Greenly streamlines the complex process of ESG data collection, consolidation, and management all in 1 platform.
📥 Import qualitative & quantitative data — platform processes & flags errors
🤖 AI-powered data processing & auto-filling of answers
🔗 Integrated connectivity: map & connect data points across indicators, eliminate redundancy
📂 Centralised platform for all ESG data & supporting docs
⏱️ Track collaborator progress, set reminders & deadlines for compliance
🛡️ Audit-ready traceability: instantly track every change
📊 ESG dashboards to track all key KPIs
🏢 Multi-entity task management & data ingestion at all levels
🧠 AI-powered pre-filling from documentation saves weeks of manual work
🧮 Automatic calculations handle dependencies & speed up consolidation
📈 Multi-entity data collection simplified by mirroring company structure
Strategic ESG Impact & Risk Mitigation
Greenly empowers companies to move beyond reporting to develop strategy, identify risks, and unlock opportunities.
📋 Automated Double Materiality Assessment (DMA) built with CSRD experts
🤖 AI-powered climate risk forecasting integrated into DMA with site-level detail
💰 Translate climate risk into quantified financial opportunities
📍 Location-specific financial risk breakdowns with IPCC-backed data
🔎 Data gap analysis from DMA to improve future reporting
📈 Automated Climate KPI integration
📊 Advanced Materiality Module: benchmarks & specialised add-ons (e.g., CSA)
Tailored & Future-Ready Reporting
Flexible reporting with interoperability across 15+ frameworks.
📝 Custom framework creation with tailored reports
🔀 Interoperability across 10+ frameworks with harmonised database
⚡ Accelerated report creation with AI-powered generation and pre-filling
📄 Auto-generation of complete ESG reports (qualitative & quantitative data)
🛡️ Audit-ready guaranteed reports
💻 Automated ESG report gen incl. XHTML & XBRL for CSRD
📂 Centralised audit trails & attachments per indicator
🤝 Collaborative workflows managing full indicator lifecycle
Expert Guidance & Continuous Support
Comprehensive support & training to empower ESG teams and ensure successful, autonomous reporting.
🧑💼 Dedicated Project Managers & ESG Experts for each framework
📚 Extensive training & resources available on the platform
🤖 AI-powered in-app chatbot (24/7) for instant answers
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