To PESTLE or to SWOT your ESG?

When you are in the process of designing and formulating your ESG strategy the first step you need to take is conduct a materiality assessment. Which is a formal exercises designed to engage stakeholders and find out how important specific environmental, social and governance (ESG) issues are to them. The outcomes gained can then be used to inform strategy and communication, and help you tell an impactful ESG story.

Part of the designing the materiality assessment is looking at PESTLE and SWOT.

WHY?

The Political, Economic, Sociological, Technological, Legal and Environmental (PESTLE) helps you understand the ESG trends related to your material issues for example it will help you answer

1. How could the change in the greenhouse and employment regulations affect your business?
2. What type of technologies such as blockchain and payments will help manage a sustainable supply chain and customer mindset?
3. How would the various regulations in the countries you operate in affect your procurement and especially ensure that they are ethical and social impactful?
4. How would your marketing and communications activities be planned and rolled out depending on the above external factors.

To start your PESTLE analysis, ask these questions which I read somewhere, and they resonated with me

1. What ESG trading policies impact my business?
2. What ESG regulations must 1 follow, and have they changed in the last 5, 10, 20 years?
3. What ESG environmental issues, if any, should be addressed (i.e. eco-friendly resources/products, natural disasters, etc.)
4. How much does globalization affect my market share?
5. What ESG taxes must I follow, and how does it affect my service offerings (if at all)?
6. Is the economy stable, unstable, or growing for my industry?
7. Who is my target market?
8. How are consumer opinions changing regarding my product or service?
9. Is the population demographic growing or slowing down and if so, how is it affecting my business?
10. Have I documented ESG changes in how and when your customers purchase my products?
11. What ESG technology is critical for my day-to-day operations?
12. What new ESG technology is available that could streamline decision-making and product development?
13. Do I depend on 3rd parties for any tech support or solutions?
14. Am I using technology to stay ahead of the competition and if so, how?

In short PESTLE will inform your appetite as an organization on how ambitious or how conservative your ESG strategy will be.

Following the PESTLE analysis comes the ESG SWOT analysis. Strengths, Weaknesses, Opportunities and Threats (SWOT) will help you assess how are you positioned to manage the ESG issues and trends across your departments and your sector. You might for instance find that you are already scoring high in working with ethical suppliers, but your communications team weren’t aware of this. You may also find that your peers have all committed to reducing their carbon footprint, but you haven’t yet. Therefore, when you start your SWOT think of where you want your organization to be in the next 5-10 years and why?

To start your SWOT analysis, ask these questions which I read somewhere, and they resonated with me

1. What are my assets?
2. Which one of those assets is the strongest?
3. What makes me better than my competitors?
4. What are the current ongoing ESG trends & Initiatives?
5. Will these trends affect me in a positive manner?
6. Can I take advantage of the local market?
7. What areas do I need improvement on?
8. What are the things I need to avoid?
9. What ESG areas do my competitors have an advantage on?
10. What external changes will bring my ESG opportunities?
11. What are the negative ESG aspects in the current market?
12. Are there potential competitors who can give me a competition in the future?
13. What are the ESG obstacles I am facing in the current mission?
14. Have I done anything which may lead to a possible lawsuit?

In short, the SWOT analysis will provide you with a clear picture of what opportunities you can take and how you can be ahead of your competitors

Once the above questions are answered and thought of, you will be in a very good position because the above is your gap analysis which will inform your ESG policy and Strategy.

In case you don't know who we are, we are Communique. the ESG B.Corp Certified Consultancy. We help our clients integrate Environmental, Social, Governance (ESG) within their business model and communicate it effectively.

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If you fancy a chat on the above feel free to email me anytime gihan@communique.global

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