As CFOs and their executive teams look to hit Q2 goals, while looking ahead to Q3 challenges, pressures in the environmental, social, and corporate governance (ESG) space may be drawing productivity away from their organizations' limited resources.

The corporate equality index (CEI), a rating system separate from revenue and brand recognition, pushes to drive conversations around diversity, equity, and inclusion (DEI) in the workplace. Its emergence is evidence of the continued expansion and ambiguity of ESG and its subsets.

These areas, many of which have their own leadership — some even in executive roles — desire quick changes to internal and external operations. Those changes, according to data, are putting pressure on many leaders who already have their hands full.

According to CFO’s 2023 Q2 outlook report, all executives, not just CFOs, feel the pressures of ESG adherence.  Nearly all (94%) of executives surveyed said they strongly or somewhat agree that they feel external pressure to prioritize ESG initiatives at their companies. 

ESG Research and Preparation 

With the social and political backlash being felt by the companies who have steered heavily into ESG-inspired pursuits, CFOs must remain aware of their companies' priorities. While some may be looking to appeal to investors with high CEI scores, other leaders may be focused on building brand recognition and keeping customers satisfied. 

Leaders who wish to keep sales and potential customers' thoughts on the brand both high and sustainable should consider their ESG approach with their customers at the forefront. Knowing the organization's target audience and customer base is extremely important. Few companies can afford the multi-billion dollar backlashes being faced by those criticized for taking their initiatives too far.  

ESG Transparency and Communication

Companies that wish to incorporate these initiatives internally should do so with transparency from the beginning. Leaders should provide spaces for open discussions about these topics, with a focus on hearing all ideas without consequences to the stakeholder bringing them. Instead of expecting employees to conform to someone else’s ideas of what ESG is, leaders may be better served by gauging their own people on what they believe the company's ESG role is and how best they can do their part. 

CFOs should recognize that some employees may disagree with ESG-related initiatives. But an open environment can allow employees to feel included while also providing authenticity in the workplace, an environment that tomorrow's workforce craves from an employer.

With this in mind, leaders can shift the pressures they are feeling about ESG into productive conversations about the goals, aspirations, and directions their organization wishes to work toward while choosing which of the subsets of ESG adherence to focus on first.