This article provides a detailed response to: What are the latest trends in leveraging environmental, social, and governance (ESG) criteria in turnaround strategies? For a comprehensive understanding of Turnaround, we also include relevant case studies for further reading and links to Turnaround templates.
TLDR Leveraging ESG criteria in turnaround strategies involves integrating ESG into Strategic Planning, Operational Excellence, and Stakeholder Engagement to unlock opportunities, improve resilience, and create stakeholder value.
TABLE OF CONTENTS
Overview Strategic Planning and ESG Integration Operational Excellence and ESG Criteria ESG and Stakeholder Engagement Turnaround Templates Turnaround Case Studies Related Questions
All Recommended Topics
Before we begin, let's review some important management concepts, as they relate to this question.
Environmental, Social, and Governance (ESG) criteria have increasingly become a cornerstone for organizations aiming to secure their long-term success and resilience. In the context of turnaround strategies, ESG factors are not just risk mitigators but also avenues for uncovering new opportunities. This strategic pivot towards ESG integration is driven by changing stakeholder expectations, regulatory pressures, and the recognition of sustainability as a driver of innovation and competitive advantage.
Strategic Planning and ESG Integration
Organizations undergoing turnaround efforts are now prioritizing ESG criteria within their Strategic Planning processes. A study by McKinsey & Company highlights that companies integrating ESG into their core strategy can achieve higher valuation multiples and better operational performance. This integration involves a comprehensive assessment of ESG risks and opportunities, alignment with core business objectives, and the development of clear, measurable ESG goals. For instance, a manufacturing company might focus on reducing its carbon footprint and improving labor practices within its supply chain as part of its turnaround strategy. These efforts not only address regulatory and consumer demands but also lead to cost reductions and enhanced brand reputation.
Moreover, ESG-focused Strategic Planning requires the establishment of robust governance structures to oversee ESG initiatives. This includes the formation of dedicated ESG committees or the integration of ESG responsibilities within existing executive roles. Such structures ensure accountability and the effective implementation of ESG strategies.
Real-world examples include companies like Unilever and Patagonia, which have embedded sustainability into their core business strategies, resulting in significant financial and operational benefits. These companies demonstrate how ESG integration can drive innovation, open new markets, and enhance stakeholder relationships.
Operational Excellence and ESG Criteria
Operational Excellence initiatives are increasingly incorporating ESG criteria to enhance efficiency, reduce waste, and mitigate environmental and social risks. For organizations in turnaround, this approach not only supports cost reduction but also aligns operations with sustainability goals. Energy efficiency improvements, waste reduction programs, and sustainable sourcing practices are examples of how ESG can be integrated into operational processes. Accenture's research underscores the importance of leveraging digital technologies to enhance ESG data collection, monitoring, and reporting, thereby enabling better decision-making and performance tracking.
Furthermore, engaging employees in sustainability initiatives as part of Operational Excellence efforts can foster a culture of innovation and continuous improvement. This engagement can take the form of sustainability training programs, employee-led green initiatives, and incentives for identifying and implementing ESG improvements.
A notable example is Schneider Electric, which has been recognized for its efforts to integrate sustainability into its operations. The company's focus on energy management and automation has not only reduced its environmental footprint but also created new business opportunities in the green technology space.
ESG and Stakeholder Engagement
Effective stakeholder engagement is critical for organizations implementing turnaround strategies with an ESG focus. Transparency and regular communication about ESG goals, initiatives, and progress can help build trust and support among customers, investors, employees, and the wider community. PwC's analysis suggests that organizations that proactively engage stakeholders on ESG issues are better positioned to anticipate and respond to changing expectations and regulatory requirements.
Investor relations are particularly impacted by ESG performance, as an increasing number of investors are incorporating ESG criteria into their investment decisions. Demonstrating a strong commitment to ESG can attract impact investors and improve access to capital. For example, companies listed on the Dow Jones Sustainability Index often experience increased investor interest and higher liquidity.
Starbucks serves as an illustrative example of effective stakeholder engagement through its comprehensive sustainability strategy, which includes ambitious goals for reducing waste, conserving water, and supporting sustainable coffee production. The company's transparent reporting and active communication on its sustainability journey have strengthened its brand and customer loyalty.
In conclusion, leveraging ESG criteria in turnaround strategies offers a pathway for organizations to not only address immediate financial and operational challenges but also to build a foundation for sustainable, long-term success. By integrating ESG into Strategic Planning, Operational Excellence, and Stakeholder Engagement efforts, organizations can unlock new opportunities, enhance resilience, and create value for all stakeholders.
Turnaround Document Resources
Here are templates, frameworks, and toolkits relevant to Turnaround from the Flevy Marketplace. View all our Turnaround templates here.
Explore all of our templates in: Turnaround
Turnaround Case Studies
For a practical understanding of Turnaround, take a look at these case studies.
Organizational Restructuring Best Practices for a Global Technology Firm
Scenario: A global technology company has grown rapidly over the past five years and now employs tens of thousands of people across multiple regions.
Turnaround Strategy and Revenue Management for a Boutique Luxury Hotel and Wellness Resort Chain
Scenario: A boutique luxury hotel and wellness resort chain is facing declining revenue, occupancy, and average daily rate in a highly competitive market.
Business Turnaround Case Study: Mid-Sized Real Estate Firm
Scenario:
The mid-sized real estate firm faced a critical business turnaround challenge due to declining sales, profitability, and market share erosion in a highly competitive market.
Luxury Brand Turnaround Case Study: Retail Turnaround
Scenario: In this retail turnaround case study, a luxury fashion retailer based in North America has seen a steady decline in sales over the past 24 months, driven by the rise of e-commerce and a failure to adapt to changing consumer behaviors.
Operational Excellence in Healthcare: Regional Hospital Case Study
Scenario:
A regional hospital faced a 20% increase in patient wait times and a 15% decline in patient satisfaction scores due to outdated processes and systems.
Turnaround Strategy for Telecom Operator in Competitive Landscape
Scenario: The organization, a regional telecom operator, is facing declining market share and profitability in an increasingly saturated and competitive environment.
Explore all Flevy Management Case Studies
Related Questions
Here are our additional questions you may be interested in.
Strategy & Operations, Digital Transformation, Management Consulting
This Q&A article was reviewed by David Tang. David is the CEO and Founder of Flevy. Prior to Flevy, David worked as a management consultant for 8 years, where he served clients in North America, EMEA, and APAC. He graduated from Cornell with a BS in Electrical Engineering and MEng in Management.
It is licensed under CC BY 4.0. You're free to share and adapt with attribution. To cite this article, please use:
Source: "What are the latest trends in leveraging environmental, social, and governance (ESG) criteria in turnaround strategies?," Flevy Management Insights, David Tang, 2026
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