How to do Cannabis ESG right

Few topics are more hyped in the cannabis space right now than ESG.  ESG can be a strong business enabler and driver of meaningful social and environmental change.

At the same time, implementing ESG programs can be financially and operationally daunting, and should be approached sensibly and pragmatically.

There is a bewildering choice of methodologies and eager consultants looking to capitalize on your FOMO. How do you ensure success without biting off more you can chew and getting burned publicly?

Here are 5 lessons gleaned from my ESG projects:

1.      Align ESG with your strategic and financial goals.  Yes, we need to save the planet. Millennials care a lot, yadda yadda.  However, its easy to ignore the fact that employing ESG is a long-term proposition and cannabis firms ultimately need to see a ROI to sustain the effort. For every Patagonia success story, there are plenty of companies wasting time and money on initiatives that do not link with corporate positioning and don’t deliver tangible and measurable business value;

2.      ESG is not CSR. ESG is a new way to do business and report on it.  The implications are significant and long-lasting for your operations, governance and brand.  On the other hand, CSR is typically a short-term, tactical means of giving back to your community. Both are important but have different consequences for your business;

3.      Don’t virtue signal with misleading ESG results.  You will eventually be outed (often by your own employees). The regulatory and customer blowback can be painful and much more costly than the reputational lift you thought you were getting undertaking an ESG initiative in the first place;

4.      Be practical.  Virtually no cannabis company has the money, time and resources to do everything they want or should do. Choose an achievable ESG lane (i.e. relevant measure), execute via cross functional teams, learn from the results and then expand the program based on real outcomes;

5.      Design in ESG.  It is easier to include ESG principles and tracking when starting something new, like a division, facility or product line. Retrofitting an existing business is very possible but takes much more heavy lifting, particularly when it comes to change management considerations.

Here’s to more quality ESG in cannabis in 2022.

#ESG #CSR #governance #environment #social