IMHO: Still talking ESG? It’s time to govern it

If there is one constant across New Zealand business right now, it is change. Companies face evolving consumer expectations, regulatory pressures and supply chain transformations, all while needing to deliver growth and resilience. Boards are increasingly being asked to govern not just steady-state operations, but organisations in transition.

This requires a different mindset. Governing business as usual does not cut it when the board's role is to oversee strategic sustainability, navigate uncertainty and embed long-term change. Boards play a critical role in making sense of complex environmental, social and governance (ESG) risks and opportunities, setting a course for management and supporting engagement across the organisation and value chain.

A Double Materiality Assessment, or DMA, is essential to enable this. Unlike traditional materiality assessments that focus only on risks to the business, a DMA considers both financial materiality, which is how sustainability issues impact the business, and impact materiality, which is how the business affects the environment, society and stakeholders. This dual perspective equips boards to have structured, strategic conversations that bridge the gap between sustainability ambitions and current operations – both internally and across the value chain.

For example, a food and beverage retailer might use a DMA to make sustainability relevant to their business and prioritise key areas such as energy and carbon efficiency, responsible product propositions, supply chain control, material efficiency and waste, talent management and retention, and ethics and compliance, allowing the board to focus on the sustainability risks and opportunities that matter most to their business and value chain.

Embedding sustainability in a business is most effective when guided by a DMA. By identifying ESG topics that are both strategically material and impactful, boards can prioritise initiatives that deliver measurable value – reducing costs, improving operational efficiency, strengthening brand and reputation, and driving growth. 

Recent IBM research reinforces this, showing that companies embedding sustainability in their strategy are:

• • 16% more likely to achieve revenue growth
  • 52% more likely to outperform peers on profitability
  • Twice as likely to see significant improvements in operating costs

DMA acts as the roadmap to achieve these outcomes, ensuring sustainability is not just a reporting exercise but a driver of performance and return.

Next steps for directors

• • Use a DMA to structure boardroom conversations, link sustainability to strategy and make ESG relevant to the business
  • Focus on the sustainability risks and opportunities that matter most, prioritising initiatives that deliver measurable value across operations, the value chain and stakeholder engagement
  • Strengthen board capability and decision-making by addressing knowledge or perspective gaps, embedding sustainability into strategic governance, and tracking performance and impact

Boards that embrace this approach will be better prepared for regulatory expectations, more resilient to market changes and better positioned to capture the value of sustainability in a meaningful, measurable way.

Sydney Straver is the Managing Director of &BLOOM. Over the past decade she’s helped organisations build capabilities to strategically embed ESG. &BLOOM offers an initial free scan, providing a high-level DMA to help boards surf the green wave strategically, governing sustainability in a way that creates both impact and return.