Member Article

Death by consultancy: Insourcing versus outsourcing the E of your ESG strategy

It is not that ESG isn’t important – we all know it is. It is knowing how to get stuff done, that is the problem.

All too often organisations have plenty of intent and even have a strategy all mapped out, but when it gets to deploying the nitty gritty ESG turns into a veritable minefield. This is particularly true when it comes to the E of Environmental, Social and Governance strategy. And, as a result, an ESG paralysis is plaguing the UK’s sustainability agenda.

There are several barriers to ESG success. We’ve spoken to a number of organisations and the same old culprits come to the forefront, including:

• Struggling to free up capex budget
• A lack of power; the person in charge of ESG implementation still must get sign off and budget from the board for every tactical decision
• Sourcing the right technology to collect the right data
• Inconsistent and incompatible data
• Conflicting ESG objectives

All of the above can prove to be crippling to an organisation attempting to succeed at ESG. But the barrier that we have found to be the most common and the biggest stumbling block of them all: death by consultancy. Everyone, but everyone, now has some kind of ESG solution. But how do you cut through the BS to find the answer that actually works (in time, on budget, and with the right results?)

It is a minefield.

What is the silver bullet? Is there one?

Yes, there is. For when it comes to focusing on the environment the answer is lies in pragmatism and collaboration; in making step-by-step tangible differences that can be celebrated.

The best way to do this is through forging partnerships, balancing insourcing with outsourcing. Supporting your internal people with experts that together can execute and demonstrate quick wins. Project management at its purest form. Establishing a multi-disciplinary team at the heart of the business that has the power to make decisions and has control of a specific budget for the project. The team creates the strategy and executes on it reporting into the business at regular intervals. Where necessary additional organisational sponsors can be bolted onto the team to safeguard collaboration. This approach ensures that the internal culture “how we do things around here” does not become a barrier (the number of times we’ve heard “oh you can’t do that, that’s not how we do things here!”) whilst ensuring the right expertise for the job. Essentially this approach translates the external expertise into a solution that is 100 per cent fit for purpose.

An example of a collaborative project that will achieve a quick win is concentrating on the reduction of energy consumption – which in the current climate is critical for all businesses. The pub trade and fish and chip sector have both recently spoken out passionately about the impact of rising energy prices on their respective industries. It was estimated that two thirds of pubs would be forced to close their doors this winter without intervention from the government. We’ve obviously seen the new PM outline her support packages and it remains to be seen if it will have the desired impact, but notwithstanding for many businesses minimising the amount of energy consumed is not just an environmental concern, but a business critical one, that will ultimately save jobs and the planet. A win-win.

Working with external expertise a business can build a smart infrastructure system including sensors, external data sources and building management software to turn its estate into a data rig; not only gathering all the right information, but also ensuring that previously siloed data is compatible for advanced analytics. This results in the ability to reduce energy consumption by optimising the air quality, humidity and temperature controls across the business and its locations. Robert Dyas and DFS have both taken this exact approach which over the past six months has resulted in close to a 30 per cent reduction in energy usage respectively.

This collaborative insource/outsource approach is not just proving successful for retailers but can be applied across a wide raft of organisations with large property portfolios such as the hospitality industry or sectors with different stakeholders such as property management companies.

When it comes to outsourcing there are always pros and cons. However, a hybrid approach which sees the marriage on insourcing and outsourcing means that things get done. It’s the best of both worlds: internal company knowledge and sponsorship combined with external best of breed ESG expertise.

This was posted in Bdaily's Members' News section by Beyond ESG .