Part 2: Flexible wins the race: How to make ESG part of your business

In Part 2 of our ESG for Small Business Series, we look at a step-by-step plan to improve your approach to managing environmental, social and governance (ESG) risks and opportunities. Here you’ll find practical tips to get started and stay on track.

Understanding ESG is an essential part of running a business in Australia today. In Part 1 of our ESG series, we looked at what ESG is, and why it’s so important for your business.

There are many benefits of putting your time to ESG. But how do you go about making it a part of the day-to-day operations of your business?
Bendigo and Adelaide Bank’s Head of Sustainability, Brooke Pettit explains how SMEs can integrate ESG into business operations.

Flexibility gets results

“Today ESG is a standard for sustainable and ethical behaviour for businesses. It’s no longer a nice to have, but a necessary part of how businesses of any size should operate,” Ms Pettit said.

“The good news is that small businesses are already managing ESG risks and opportunities every day. Big or small, they’re taking actions to improve their environment and society in how they operate.

“The small businesses that are most successful are the ones that do things their way. They know that there’s no one size fits all model. They also know that consistency and flexibility – and not necessarily speed – is what gets the best results in the long run.”

Here are four steps to get started;

Know where your business stands

Understanding your business’ sustainability journey is the first step.
“It’s easy to think you’re starting from scratch. But, once you start putting pen to paper, you’ll see your business is likely far more progressed than you might think,” she said.

Desktop research is a good place to start. Take a look at news articles to give you an idea of the issues and opportunities for your business and your industry. Keep an eye on what your competitors are doing in their reporting and communications.

Regulations that are in place for your industry, or that might come into place, are important to understand. Research might help you work out how best to manage current and future changes.

Ms Pettit said some businesses set up workshops with selected employees and other stakeholders . This might include businesses in your supply chain and even your customers. Workshops can help to assess current practices and build awareness. They can highlight priorities and improve commitment from everyone critical to their business operations.

“It’s also an opportunity to understand your business’ unique value. Learn what your stakeholders expect, discover opportunities for growth, and identify how you can create positive impacts for the long term. Then, it’s important to decide where you will place your attention – you don’t have to be all things to all people.”

The United Nations Global Impact provides sustainability research and training for all businesses. It’s a valuable resource that can help align your business strategies and operations with your sustainability goals.

Make a plan

Next, create an ESG strategy using this valuable information. The key here is to keep it simple and decide what matters most.

Firstly, the plan should clearly outline your business values, purpose and objectives.

Then, it should outline your ESG goals, which must align with your business objectives, policies and processes. This should include how you will go about achieving your ESG aspirations and who is responsible for achieving them. It might be you as the business owner, leadership teams or an appointed sustainability committee.

You should also outline your approach to sustainability. This focuses on why your business is interested in ESG and what it means for everyone connected to your business. This could mean calling out a particular area of ESG that is especially important to your business, such as waste management, energy and water use, or employee health and safety.

You should also set targets for these important items (more about this later).

“For Bendigo and Adelaide Bank, a focus on climate change means we can support our customers, communities, people and business to prepare for, and adapt to, impacts and opportunities to make a meaningful difference and create value,” she said.

“With a clear and simple plan that focuses on what’s most important, you’re giving your business the best chance of success. Build in flexibility to change as your business or external conditions change.

“And remember, you don’t have to do everything – focus on what’s most important, and being consistent and flexible is a great way to build sustainability into your business plan and practices.”

For an example of a Sustainability Business Plan, see page 13 of Bendigo and Adelaide Bank’s Sustainability Report 2023.

Put your strategy into practice

Here is where accountability for activities really matters. Who is responsible for doing what, and who will oversee the activities that matter?

Your people will be critical in making your ESG strategy work. The more they feel connected to creating the strategy and understanding how it fits into the business operations, the more they will want to be accountable for bringing it to life.

“Some businesses choose to have mini strategies for a key actions, depending on what’s important to their business. This ensures the things that matter are covered, and that the right people are accountable,” she said.

Review your strategy every year, building on what you’ve created as you achieve your goals.

Measure your progress

Renowned management consultant Peter Drucker once said, “You can’t improve on what you don’t measure.”

Tracking the right measurements for your business will mean you can build on your efforts to get the most out of a your ESG strategy.

“Having meaningful, simple and achievable, and above all, flexible measurements are key,” Ms Pettit said, “but you can only do this with confidence once you’ve understood your current ESG position and created a strategy.”

“Your business will have a unique value and proposition, and this will help you identify and manage your ESG risks and opportunities.”

In Part 3 of the ESG for Small Business Series, we’ll dive into ways you can communicate your ESG strategy and performance, the ins and outs of greenwashing and bluewashing, and why data matters.

Bendigo Bank’s approach to sustainability

Like many other companies, large and small, Bendigo and Adelaide Bank’s ambition is to drive action towards a resilient and sustainable future. We want to grow the prosperity of customers, communities, shareholders and our people.

You can find out more about our approach to managing sustainability related risks and opportunities in the 2023 Sustainability Report.

Your Business Matters.