Six takeaways from our webinar on why and how private businesses should prioritise ESG in 2023

Why and how should private businesses prioritise ESG in 2023? It’s a challenging question. And it was the chosen topic for a webinar that I recently took part in, alongside a panel of PwC experts in private and family business from a range of territories in North America and Europe: Shelley Gilberg, Renate de Lange-SnijdersOpens in a new window, Peter BartelsOpens in a new window and Rich Gilchrist.

During the discussion and audience Q&A, several themes came to the fore. And when it came to wrapping up the debate, we called out as a group the key takeaways that we’d drawn from the session.

The first was to see ESG as an opportunity – not as a threat or a burden imposed by regulators, customers, employees, banks or other stakeholders. As we heard during the debate, private and family businesses are often better-placed than listed corporations to spend time finding out what their stakeholders really want, and then to meet those expectations through their actions and reporting. While ESG reporting is complex, private businesses can gain an edge by collecting and disclosing the most relevant ESG data to tell a credible and compelling story and build trust. Read more about that point here.

The second takeaway was simply to get started on the ESG journey without delay, by creating a baseline inventory of ESG activities. When I speak to private and family businesses about ESG, I often discover two things. One is that they often find ESG daunting. The other is that they’re already doing many things that fit into the ESG category – usually a lot more than they’d previously realised. So, the first step is to find the ESG nuggets embedded in the business and raise them to the surface to get a baseline. This means taking an ESG inventory, and defining their ESG ambition, based on factors such as stakeholders’ expectations and what their peers – both private and listed – are doing.

The third – closely related – takeaway was to start small and then build up over time. One panellist likened the current position with ESG to the early days of the digital revolution two decades ago. A key challenge then was getting used to the idea that products didn’t have to be perfect first time, and that a company could go to market with a minimum viable product (MVP) and then improve it incrementally. ESG is the same: there’s no need to wait to have the final “super solution” before pressing ahead. Instead, companies can start with some small initiatives, see what’s most feasible and effective, and go from there.

The fourth takeaway? Don’t just leave it to one person to manage the ESG journey for the business, but rather make it an exercise for everyone. It's vital that everyone in the company understands and buys into the ESG ambition and feels they’re helping to turn it into reality. This is especially important when attracting and retaining young talent. As I know from conversations with my daughter, Gen Z hold ESG very close to their hearts – and are both passionate and educated about it. A compelling ESG vision and journey shared across the workforce, supported by the right culture, behaviours and values, will make them more likely to join and stay.

Our fifth takeaway was the potential for private businesses to turn values into value and ultimately valuation. As we all know, private and – perhaps especially – family businesses are set apart by their deeply-held values, close human relationships and culture of giving back to society. They also have a longstanding commitment to creating and preserving value in all its forms, including for future generations. ESG can be a great transmission vehicle to translate these values into measurable business value to an extent that’s never been possible before.

Building on this potential, our sixth takeaway focused on who should lead the way for the business as a whole in creating value from ESG. The answer? The CFO is ideally positioned to take the driving seat. While some larger businesses have a Chief Sustainability Officer, this is beyond the resources of many smaller private businesses. In such cases, the CFO is the ideal candidate to be the visible leader of the ESG agenda, since they already work at the nexus of three areas pivotal to ESG: regulatory reporting, cost efficiency, and the business model. So, the CFO should seize the reins – while stressing that turning the ESG ambition into reality is everyone’s responsibility. Read more about this point here.

For every business, private or listed, we’re now at a defining moment in the evolution of ESG. And private businesses have inherent advantages that put them in pole position. It’s time to understand where you are on your ESG journey, where you want to get to, and how you’ll navigate the route.