Two models, and six best practices, to help companies collaborate on ESG-related goals
09/11/2024
4 min
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“When companies collaborate, they can leverage synergies to design value propositions that each would be unable to offer alone. Collaborations have potential, therefore, to solve many of the complex, systemic and multi-faceted problems of sustainable development, but this will only happen if profitable collaboration models can be identified and scaled,” explain Laurie Ann UNDERWOOD (IÉSEG) and Lydia PRICE (CEIBS) in a *chapter of a ESG White Paper published by the China Europe International Business School (CEIBS).
To help companies, the two experts highlight two models that can be used to support sustainable business strategies and six real case examples of how they are used. Their chapter finishes with a list of six examples of best practices that can help companies avoid the most common pitfalls when embarking on different types of ESG-related collaborations. Here, we summarize the models and best practices.
Collaborations can be simple or complex
The authors explain that ESG-related collaborations can vary, ranging from simple two-party resource-pooling agreements to complex synergistic ecosystems comprised of multiple public and private, for-profit and non-profit institutions. As more organizations develop these synergies, “the potential for complex problem-solving similarly grows, but so does the difficulty of managing the network of relationships.” One tip helping collaborations to succeed, the authors add, is for one party to act as an “orchestrator” or leader “to establish and enforce the rules of participation as well as the mechanisms of value capture and sharing.”
Effective problem-solving collaborations can expand opportunities for all participants by offering shared benefits including: attracting new customers, identifying new products or services, or embracing innovative technologies. The experts highlight two proven conceptual models companies and organizations can use to develop collaborations.
Model #1: EoM model
The first model is one developed by EoM Solutions (think tank and advisory), which suggests that visualizing an ecosystem with a clear social purpose at its core will help networked participants to identify value-creation opportunities.
According to the authors, the EoM model is operationalized in four steps:
- Redefine the role of the firm and all key stakeholders to determine a key social, human or environmental issue to serve as the central purpose.
- Conduct a detailed “ecosystem mapping” to discover how each stakeholder is connected to all others and to audit the “pain-points“ faced.
- Collaborate to find solutions.
- Establish accounting mechanisms to measure and maintain balance not only for financial gain but also human, social and environmental gains.
Model #2: five stages model
The second model they highlight was developed by Harvard Kennedy School researcher Jane Nelson, who was commissioned by the Business and Sustainable Development Commission, in 2017, to determine how business, government and civil society can collaborate to accelerate and scale transformative solutions to sustainable development challenges. The authors outline Nelson’s five pathways identified for business sector engagement in sustainable development, and provide real-case examples of companies and organizations operating at each levels.
Best practices for ESG collaborations
The experts note that ESG collaborations can be challenging to accomplish because they often involve transformative change. When entering such arrangements, the experts advise all parties to “prepare to encounter setbacks, diversions and even failures alongside victories”. To help, the authors compile six best practices — developed by other scholars/consultants — to help companies to avoid the most common partnering pitfalls.
- Establish a shared vision or purpose: “Sharing a common ‘grand vision’ can keep parties moving forward even when individual steps seem small… It is easier to persist if the work is viewed as an important step in a necessary and inevitable economic transformation that requires many players in order to progress.”
- Don’t predefine “success”: “Although it is essential to share a common vision, it is equally important to allow flexibility and discovery regarding how to achieve success. Those who study ecosystems and partnerships note that growth opportunities follow when companies shift from an inside-out search for competitive superiority to an outside-in search for new problems to be solved. Keeping an open mind is a prerequisite for success.”
- Establish concrete strategies and targets: “Strategies determine the path toward the shared vision, while targets identify critical milestones toward the final goal. In combination, they align the contributions of individual partners and determine the required resources. “
- Agree on metrics to track and adjust progress: “Partnerships require transparency and regular reports about progress. Pre-agreement on what will be measured, who will track the data, and who will take corrective action helps to avoid conflicts as relationships mature. “
- Send your best team: “collaboration is a collective effort and failure to ‘pull one’ s weight’ will bring friction and tension into relationships. Resources include human capital, and partners are advised to assign staff who are both qualified and motivated by the partnership’ s long run vision. It is a mistake to reserve your best talent for proprietary initiatives while sending to the partnership those who lack the power and influence to drive change.”
- Define partner roles and responsibilities: “By attracting members with complementary skills and resources, collaborations increase the possibility of designing unique value propositions”.
Find out more in the chapter “Collaborating to Create ESG Value” published in the CEIBS 2024 ESG (Environmental, Social and Governance) White Paper, which is available here.
