It’s no secret that Gen Z prefers brands with reputations that align with their own beliefs, or that modern shoppers are savvy to brands that talk the talk but don’t actually walk the walk. Developing a company that truly builds environmental, social and governance (ESG) principles into its structure is a long, difficult road, and it requires retailers to look at themselves openly and honestly before they can even begin.
“I think it starts with vulnerability,” said Alfred Ishak, who is the Senior Director, Research and Integration/People Development at Human8 in an interview with Retail TouchPoints. “As leaders at a given company or a given retailer, you first really need to be vulnerable and be open to the change that needs to occur within your halls, within your company. From there, it’s about a true assessment of where you are.”
Getting this true assessment requires a deep look across the entire enterprise. It can start with a question like “Okay, how much buy-in and investment do we really have here from our leadership from our stakeholders? Are we able to count on them for the resources that are needed to move us along in this journey?,” said Ishak. But this is just the first step; while leaders and other major stakeholders are necessary players, truly living up to ESG standards requires buy-in from everyone.
“You need to assess employee sentiment,” said Ishak. “How do your employees, from frontline employees all the way to top executives, feel on these issues? How do they feel in terms of how diverse the company is? How inclusive the company is? Are the opportunities and the ability to progress through the company equitable and transparent? Gathering employee sentiment is really important.”
Amplifying Underrepresented Voices
Developing the “social” aspect of ESG requires retailers to actively work at understanding more about communities that are underrepresented, in the country or in their own companies. Specifically, retailers need to think specifically about how they can raise the voices of those groups and bring them into the greater conversation.
The best way to accomplish this is to immerse yourself within those communities and learn how they feel day-to-day, according to Ishak. This is the path to creating the empathy that leads to a real understanding, and therefore the capability for real action.
“A brand may have retail locations in a lot of different communities and will have a headquarters or offices in different communities,” said Ishak. “Are we benefiting those communities? Are we engaged in volunteering and charitable actions that are being seen and recognized and adding value to the communities that we work in? Those are the things that come to mind right away.”
A similar approach works for brands looking to build their credibility when it comes to sustainability. They need to take true interest in the environment, including becoming involved in projects in the areas where they operate, rather than make vague statements about their support of the issue. Truly dedicating your brand to this cause can turn customers and associates alike into brand advocates.
“Gen Z, and all of us, should be very concerned about the state of our environment, but Gen Z has a particularly large focus on this,” said Ishak. “If they know that the company they work for is doing their part to protect and be responsible stewards of our environment and practicing sustainable business practices, then they will be much more likely to be an advocate and supporter of that brand in many cases.”
More Than an Initiative, ESG is an Ongoing Journey
The other key element of a proper ESG strategy is that it lasts forever. A company can’t make strides in creating a more equitable leadership team or reduce its carbon footprint by a certain amount and then consider its work done. True ESG commitments, the ones that will actually appeal to Gen Z, are ongoing.
“That is the challenge,” said Ishak. “Don’t make it an initiative, or a quarterly or an annual goal — to really create cultural change, it’s a journey. We’re not exactly where we want to be, we are trying to do it through immersion, by making it part of our everyday life with one another and the way we service to our customers.”
This also means building transparency. Customers and workers alike should have access to your progress on these fronts, and providing this information will go a long way to proving actual dedication to the causes a retailer supports. This ties back to the theme of vulnerability — a retailer willing to put its actions on the line is a retailer that has proved its dedication to the causes it supports.
Ultimately, while ESG initiatives can have tangible benefits, these projects must be undertaken because the company truly believes in them. Keeping up the actual, long-term effort requires companies to treat their goals as part of their reason for being.
“We’re doing this because we believe it’s the right thing to do,” said Ishak. “It’s the right thing to do for our business. It’s the right thing to do for our consumers and customers. And it’s the right thing to do for our community. The fact that that aligns with a lot of Gen Z wants is an added bonus.”