While many companies now understand the value of dedicated ESG leadership, there remains no real playbook for how to get started. Here’s how ESG practitioners can standardize sustainability-forward operations and innovation across workstreams.
For many companies, environmental, social and corporate governance (ESG) is still a relatively new function — deriving from an evolution of corporate social responsibility as an organizational “nice to do” to a business-driving area of focus; due to rising expectations from investors and key stakeholders, and anticipated legislative requirements.
As a result, although many companies understand and value the benefit of dedicated ESG leadership, there remains no real playbook for how to get started.
ESG functions vary widely in terms of how they are structured within their organization, as well as how they approach ESG risks and opportunities. In fact, according to a recent global compliance-risk benchmarking survey, almost 40 percent of global companies have not clearly defined what ESG means to their organization. While responses varied by industry, it showed how ESG can create paralysis for organizations that really don’t know how to get the ball rolling effectively.
Positioning sustainability strategically within an organization
According to a recent NielsenIQ report, 92 percent of consumers say sustainability is important when choosing a brand today. The percentage of Petco shoppers who affirm sustainability is important to them while shopping for everyday goods and services aligns with this and is sometimes even higher, based on survey results from this year.
Net Zero: Aspiration vs. Reality in CPG & Retail
With thousands of consumer packaged goods (CPG) companies and retailers making net-zero commitments, but only 25% of them on track to meet them by 2035, there is a clear gap between aspirational thinking and reality on the ground. Join us as Capgemini and frog detail some of the tools, technologies, and shifts in mindset and skillset needed for companies to walk their talk and leave a legacy of resilience and stewardship for generations to come — Tuesday, Oct. 17 at SB'23 San Diego.
At Petco, we developed a dedicated ESG function aligned with our biggest ambition: driving a sustainable future for pets, people and the planet by going beyond creating sustainable products and experiences. Taking this proactive stance created the mandate for a broader approach to thinking about ESG and raised the priority of these goals as part of the business’ overall strategic focus.
At a structural level, my role as VP of Sustainability reports directly to the Chief Strategy Officer — reflecting our determination to place sustainability firmly within our corporate strategy and cementing a continued, two-way dialogue about how it fits in the overall direction of our business.
This in turn creates a sustainability mindset across all teams at Petco — from product sourcing to supply chain, operations and more. So, instead of sustainability being an offshoot or a separate initiative, we have created a culture where individuals and teams are empowered and encouraged to build sustainability into their processes, products or services at every stage.
This is critical to extending and scaling our impact as much as possible. But it also allows us to listen more in the process, rather than dictate how sustainability must be applied.
To build internal engagement and advocacy, we created two committees that each play a unique role:
Sustainability Executive Steering Committee, comprised of 13 executive-level sustainability champions, who oversee important aspects of our business — including products, services, Pet Care Centers, e-commerce and supply chain. It also includes our CEO, who regularly participates in addressing sustainability issues that affect our operations.
Sustainability Task Force, which drives the implementation of initiatives within our business departments and discusses ideas for improvement and innovation. Representatives were selected based on their passion for sustainability (which is a huge unlock to driving engagement and results!), their influence within their department, and their ability to assess where we can build and improve.
Getting started: Prioritizing high-impact ESG areas
Keeping the expansive definition of ESG in mind, early in my role, I knew it was critical to get focused on the priorities that would create the most sustainable impact for our customers; while at the same time, identifying areas that were synergistic to our brand mission and differentiators for Petco.
Prioritization was key. So, through a best-practice ESG materiality assessment, we compiled internal and external viewpoints via live interviews and surveys; and gathered feedback from stakeholders including NGOs we partner with, vendors and suppliers, our executive team and Petco customers. This process uncovered our biggest opportunities and directly informed our ESG strategy, which aligns with our key pillars: pets, people and planet. It also helps drive focus and prioritization among other Petco teams as they evaluate opportunities to drive sustainability within their specific department.
Another approach that helped me gain momentum early on was identifying near-term, low-hanging fruit opportunities to start driving progress. While it was helpful to do this and identify quick wins; more importantly, it allowed us to shape the initiatives into a short-, medium- and long-term roadmap — which outlined the time and financial investments needed to achieve our ambitions.
Depending on the company, some ESG commitments can require significant capital outlays; so, this process helps build the business case while keeping stakeholders grounded on how progress will evolve. It also gives the opportunity to lay all the right steppingstones; so, you don’t meet hurdles later in the process that you wish you’d addressed in the years before.
In this role, I’ve been able to lean into my extensive marketing experience to communicate Petco’s position on sustainability. My belief is that it’s critical to focus on the right strategic initiatives; but it’s equally as important to effectively tell our story — without it, buy-in is much harder.
For so long, sustainability has been viewed as something that happens on the margins — when in fact, it is a powerful lever to win hearts and minds across the business. Whether through saving costs across energy- and waste-reduction efforts or driving revenue by engaging new, sustainability-minded customers and selling more sustainable products, it’s important to communicate the right messages of progress with our stakeholders to further engage and garner support.
And it’s a sentiment that comes full circle.
As a publicly listed company, our CEO speaks to investors and analysts all the time. Repeatedly since IPO, he has talked about purpose-driven performance. Yes, we are a company that wants to grow; but never at the expense of our values. As a purpose-driven organization operating in a passion category such as pet, it can be all too easy to forget why our people, our customers and our stakeholders believe in and support our journey. Telling that story is key to not only demonstrating progress, but embedding why we do what we do at every stage of our growth.
Best paw forward
As a pet parent, leading ESG for a pet company has a deep-seated meaning for me. But finding the balance between not getting frustrated with the pace of progress or overwhelmed with how much can be done takes both focus and patience.
When asked what my advice to industry leaders is, I think of three things:
Leverage the passion, commitment and support of partners throughout the organization to achieve your goals — in most cases, there is a lot of it! Tap into it.
Consistently share progress and solicit regular feedback from stakeholders — no-one has a monopoly on the right ideas.
Remember that when it comes to sustainability, progress over perfection is the key — small actions today can lead to progress in the long term and incredible change in the future.
We are all at a different stage of our respective ESG journeys; but any step taken with the right insights and intention can propel your objectives forward and lead the way for others to follow suit.