In a recent survey, McKinsey consulting firm found there are seven key traits of organizations that, respondents report, have developed clear ESG momentum. Survey respondents reported that their organizations are not just paying lip service to ESG but many say their organizations are making meaningful ESG changes that have demonstrable benefits.
he survey asked more than 1,100 respondents in more than 90 countries how their organizations are rising to the ESG challenge. More than nine in ten respondents say that ESG subjects are on their organization’s agenda. While environmental topics are recently the ones making headlines, just one-third of respondents rank environmental issues as their organization’s greatest ESG priority.
ESG (Environmental, Social, and Governance) considerations have become increasingly important for businesses across various sectors, including the maritime industry. The maritime industry is a significant contributor to global carbon emissions and pollution. As concerns about climate change and environmental degradation grow, there is an increasing focus on reducing the industry’s carbon footprint, adopting sustainable practices, and investing in cleaner technologies. This includes efforts to reduce emissions from vessels, minimize waste, and protect marine ecosystems.
Overall, the importance of ESG for the maritime industry lies in its potential to drive sustainable growth, mitigate risks, meet regulatory requirements, and enhance stakeholder trust and confidence. By prioritizing ESG considerations, companies in the maritime sector can contribute to a more sustainable and responsible global shipping industry.
According to McKinsey survey, survey respondents who report that their organizations have both created financial value and increased broader impact from ESG—the two conditions for what they call “ESG momentum”—point to seven organizational traits as follows:
#1. Sights set on growth
Respondents who report working for an organization leading on ESG dimensions are 1.5 times more likely than respondents from reported bottom-decile organizations to say their organizations approach ESG topics with the aim of promoting growth. Respondents from the lowest-decile organizations, on the other hand, are 2.8 times more likely to say ESG efforts are focused on conforming to industry standards or regulatory requirements.
#2. Board directors and senior leaders who connect with external stakeholders
Respondents who report that their organizations have built ESG momentum are more likely than those at reported lowest-decile organizations to say their organization’s board members, CEOs, and CFOs connect with external stakeholders and feel accountable to them.
#3. Prioritization of strengths that matter to stakeholders
Respondents who report their organizations as leading on ESG dimensions are much more likely than respondents at reported lowest-decile organizations to find that their organizations have identified business-model-specific ESG issues, particularly those issues that, respondents say, matter most to their external stakeholders. These organizations, respondents further report, identify and concentrate on the specific stakeholder priorities for which their organizations are uniquely placed to excel rather than diffuse ESG efforts across many avenues.
#4. An ESG leader in the C-suite
Most respondents at organizations that, according to survey results, have built significant ESG momentum report their organization’s ESG teams are led by a member of the C-suite. This executive is empowered to define ESG ambitions and strategy with the CEO, ensure collaboration among the other members of the executive team, and orchestrate initiatives across the organization.
#5. A central team. Survey results suggest that having a central ESG team or function can enable ESG momentum
Respondents who say their organizations are furthest ahead on ESG dimensions are much more likely than those at reported lowest-decile organizations to report that their organizations have such a team, even if the team includes five or fewer people. These teams can manage ESG-strategy- and target-setting processes, coordinate delivery of initiatives and ESG reporting across the organization, and ensure that ESG considerations are embedded into employees’ day-to-day behaviors. They also coordinate across functions so that efforts are not siloed within one department.
#6. Purpose embedded throughout the organization
Respondents who report that their organizations are leading on ESG dimensions say their organizations are very effective at embedding purpose into various aspects of their business, such as their product or brand portfolio and their talent-management efforts. By embedding purpose into organizational culture, the survey suggests, organizations can build an appetite for change that can bolster ESG initiatives.
7. Incentives tied to ESG metrics
Respondents from organizations reported to have the most ESG momentum are nearly three times as likely as respondents from reported bottom-decile organizations to observe that their organizations tie CEOs’ and CFOs’ financial incentives to ESG metrics. Embedding key ESG impact metrics into leaders’ and employees’ incentives can demonstrate, both internally and externally, that ESG is a priority for the organization. It also helps ensure accountability for initiatives. An effective ESG incentive structure uses clear metrics, based on meaningful KPIs that gauge progress on key ESG objectives.