There are many reasons why organizations do it and have done it for many years now. For us, two of these reasons are big enough on their own to justify the time and resources dedicated to this: Because it has been proven in many studies that having a solid ESG strategy makes organizations more resilient because they recognize risks and opportunities that otherwise could have been lost. Because investors are moving in this direction (there are more than 3,300 signatories of the UN’s PRIs and growing each year) and thus they will require more disclosure and better ESG strategies from the companies or platforms in which they invest.

Identify a leader to champion the creation and execution of your ESG strategy. The ESG champion should have enough authority across the organization to gather data, engage cross-functional teams, and influence strategy. You’ll want stakeholders involved from your key internal services—finance, procurement, legal, human resources, DEI, IT, facilities, and risk management—as well as operational functions and those who support the board. Bring in members of the management team who understand strategy, the bigger picture, and are excited to invest in a change management initiative.

Before beginning an ESG plan, conduct a readiness assessment. If you build an ESG strategy that isn’t suitably supported, there are potential risks to your organization’s reputation and strategy effectiveness. The readiness assessment should identify your desired state and whether you have the organizational resources, skills, data, and capacity to get there; if not, what gaps exist, and what resources may you need to address those gaps? Each organization’s capacity, culture, and skills will vary, but your ESG committee can help identify existing resources across the organization. If gaps remain, part of your ESG strategy can include initiatives to address them.

Approach creating an ESG plan by starting with your organization’s strategic plan: Where does ESG align with your overall vision, mission, and values? Establish vision and purpose statements for your ESG initiative and develop both short-term and long-term goals that are relevant to your board, investors, stakeholders, staff, and leadership. Each goal should be supported by target outcomes and initiatives that are clearly defined and measurable, have ownership assigned, and resources dedicated or budgeted where applicable.

The most important part of your ESG strategy is deciding what and how to report your progress toward achieving outcomes. You’ll want to tell your own story and provide timely, relevant information to your stakeholders. For each outcome area, identify meaningful performance metrics. Performance metrics will vary for each organization based on your unique operations and the outcomes you’ve established. Assess the data you have available, identify any gaps you want to fill, and ensure that the data you report is reliable and accurate.

The bad news first: ESG compliance is not a “steady state”. The ESG world and its requirements evolve continuously, materiality is dynamic, and companies that want to have a good ESG performance must work on this consistently. This means that thinking of ESG compliance as a check list where once you tick all the boxes you are done, is a mistake in our view and puts you on the path of being seen as a green-washer. Having said that, the good news is that Mexico is still in a stage of ESG development where what matters the most is that companies are actually working on their ESG strategy and taking it seriously. Companies that have spent more time doing this are obviously showing better results and are being recognized for it by the market, but even companies that are just starting with the intention of doing it right are being given enough leeway to get their strategy up to speed in the coming years. It will usually take 12-18 months to go through an initial cycle of deciding the focus areas (ideally through a materiality analysis), exploring each focus area, setting up KPIs and KPI goals, integrating all of this into the organization, and being able to produce your first sustainability or integrated report and answer an ESG questionnaire. It will take much more than that to really have robust data, robust processes, and robust reporting. This is expected and the main goal is to be on the right path.