Two Sides of ESG: Compliance and Human Experience
ESG is a widely used framework for environmental, social, and governance aspects of sustainability in companies and organizations. With increasing reporting obligations, you should remember that compliance is only the baseline for the worldwide race to sustainability. The real competition takes place in the level of human experience and behavior.
ESG – environmental, social, and governance aspects of sustainability – seems to be adopted by most of the significant companies. EU legislation, especially the new Corporate Sustainability Reporting Directive, leaves no options: nearly 50,000 companies in the EU will have to meet the CSRD reporting requirements.
The conclusion is clear: Compliance with regulations and providing the necessary reports are taken for granted. If your company fails to meet the requirements, you will be out of business. On the other hand, doing the same as 50,000 other companies (in the EU alone) will not give you a competitive edge.
If sustainable business were high jumping, compliance would be the starting height.
The starting height of sustainability and its ESG factors means that the majority of companies and brands will follow the regulations. This is extremely important for the benefit of mankind and our planet.
However, business is a competition. Those who only exceed the starting height will not be placed on the podium. The medals go to those who understand that the judges of the competition are employees, customers, and investors, not the authorities behind the regulations.
Involve People in Sustainability to Avoid Risks
People consider sustainability more and more significant. Actually, it is increasingly essential part of employee and customer experiences. If sustainability experiences, emotional in nature, do not meet the values that employees and customers hold important, people are likely to take actions to avoid or attack the companies and brands behind those experiences. This is one reason for the Great Resignation. For brands, losing trust and reputation is fatal.
Since sustainability is not only about compliance, but about business critical experiences with potentially even fatal consequences, you should not set the bar to the starting height at all. Instead, from the start, you should
Of course, make sure your company meets the ESG related regulations
In addition, involve your employees and customers in building sustainability
Involving people is at the same time a way to "register" for the competition (no one participates to exceed only the starting height) and to avoid risks.
What are the risks? Even if you think that compliance and your company's efforts are enough, you don't know the content and consequences of the sustainability experiences. People react always to their experiences, never to reality itself. From the perspective of employees, customers, and investors, their experiences are the reality.
If you are not aware of the ESG experiences, you cannot predict how people are going to react and why. Their perceptions about sustainability may be complete different from yours. You need to know what those experiences are and how they influence behavior in order to focus your actions and communications.
It is obvious that reality is not created by marketing and advertising, but through concrete actions. Communication is vital in describing reality, not to create one. Greenwashing won't go far, pretending is recognized. In the world of social media, nothing can be hidden. If employee and customer experiences correspond the real actions of your company, sustainability experiences have a strong foundation. Misinformation or misleading claims will collide the solid truth that is on your side.
These reasons are surely enough to start involving your employees and customers in sustainability. But that's not all. You can not only tackle the risks but also strive for the upside of sustainability.
Strive for the Upside of Sustainability Through Empathy
How to find the upside of sustainability: the higher value for people, the planet, and your business?
The way you take care of people and the environment, bear responsibility for society, and deal with your finance and governance, are a lot more than just compliance with regulations. To explore and grasp those tangible things, you need empathy: a true connection with your employees and customers.
What does it mean in practise? You may think that your company is already conducting employee and customer surveys. Why likert scales or scales of satisfaction are not enough? Aren't emojis about feelings?
The simple answer is no. Empathy and traditional surveys or mood meters are two totally different things. Empathy means profound understanding of and paying attention to human emotions and different viewpoints behind them. A crucially important addition is to identify the emotional action tendencies that guide employee and customer behavior.
In empathy, emotions are not smileys, emojis, or thumbs. They are not levels of satisfaction. Satisfaction is only one of human emotions – and actually a passivating one, indicating no competitive edge.
True emotions indicate different meanings. They are based on subjective appraisals and have distinctive behavioral influences. For example, compassion emerges when we see other people in distress – it engages us to help others. Relief, for example, is about avoiding undesirable scenarios or solving problems – it has a mild positive, engaging effect on behavior. Fear, for example, indicates threat and lack of control – it makes us flee, paralyze, or fight. Sadness, on the other hand, is about losing something valuable irreversibly – it is the most crippling of all emotions.
These examples reveal that emotions are not just positive or negative experiences. The positive and negative "valence" is only one dimension of emotions, not an emotion itself. There are other dimensions as well that tell us the story of different appraisals and behavioral consequences.
The deeper layers of meanings lie in the case-specific root causes: the different viewpoints behind emotions. True empathy do not ignore these meaningful insights. In addition, advanced empathy contains the behavioral impact and may draw a line between the concrete root causes and behavior.
Welcome to the World of Empathy Analytics™
At its best, what can be obtained through the combination of empathy and sustainability? Empathy, in the context of environmental, social, and governance aspects of sustainability, may reveal
How do your employees and customers truly feel about the ESG sides of your company's sustainability?
What are the concrete root causes behind their emotions?
Which are the significant sustainability factors and ESG details from the people's perspective?
How do those elements of sustainability influence employee and customer behavior?
Where to target actions and communications, to build higher value for people, the planet, and your business?
How to avoid risks and to create commitment, competitive edge, and sustainable growth?
All this is possible through science – and not only possible but already provided by an existing methodology and a technology that can be used by any company and organization. All the questions above can be answered in the world of Empathy Analytics™, a method, an algorithm, and a platform based on emotions, science, and data[1,2,3].
Surprisingly, deeper insight does not mean more complex and burdening surveys. On the contrary, Empathy Analytics™ is easier and more cost effective for companies as well as simpler and more intuitive for employees and customers. The simplicity and intuitiveness originate in science.
When building empathy among employees and customers in the context of sustainability, ESG is an excellent framework. It provides a consistent model for understanding sustainability experiences and their consequences, as well as identifying the actions and communications that should be taken.
In short, compliance is only the starting point of the global race to sustainability. If you merely focus on the baseline, it will be hard to be one of the winners. To promote the first steps, as well as an advanced ESG strategy, we offer Empathy Analytics™, a unique method based on emotions, science, and data. Through Empathy Analytics™ you are able to involve your employees and customers, to tackle risks, and to create higher value to people, the planet, and your business. It is a road to commitment, competitive edge, and sustainable growth.
 Based on the scientific research conducted by the University of Geneva.
 Scherer, K.R., Fontaine, J.R.J, & Soriano, C. (2013). Components of Emotional Meaning. Oxford University Press.
 A scientific algorithm that predicts positive, engaged, and prosocial behavior, developed by NayaDaya Inc.
Global Race to Sustainability – What Is Missing?
In the accelerating global race to sustainability, mere compliance does not provide an advantage. Instead, competitive edge comes from experiences.
Higher Value From Sustainability Through Empathy and Experiences
Sustainability experiences can be explored through Empathy Analytics™, based on emotions, science, and data. The method creates an intuitive snapshot of the environmental, social, and governance (ESG) aspects of sustainability.