Environment. Social. Governance. The use of these three words has skyrocketed in the last few years, and today most businesses have strategies devoted entirely to them. But how do you measure ESG and how will it help the UK reach Net Zero? Håkon Dammen, UK Managing Director at ESG powerhouse Position Green, shares his insights on the importance of ESG, and why the UK is the perfect place to implement its solutions.
“There is so much potential in the UK – the market is massive and so is the demand for ESG improvement. I’m sure we could have continuous growth here for the next 10 years.”
The interest in so called ESG has grown rapidly within the last few years, not least in the UK. Short for “Environmental, Social, Governance”, it is a way of assessing business performance, looking at how well it aligns with a company’s ethical aims. Fuelled by demands coming from lawmakers, investors, and clients, many businesses are setting up ambitious ESG goals, looking for new ways to turn promise into practice.
“All over Europe, the demand for ESG guidance is growing. Most businesses have both the willingness and the funds to make the necessary changes, but they lack the knowledge of how to do it. And compared to Scandinavia, ESG measuring is still a new thing here in the UK, so there aren’t many examples of how to do it successfully.”
From charity to strategy
Historically viewed as more of a goodwill gesture than a business strategy, today, prioritising ESG is strongly linked with profitability. From cost reduction and energy saving, to increased productivity and happier employees, studies made on the area all point in the same direction. Meanwhile, more and more countries are putting pressure on businesses to act responsibly.
“There are various drivers; the UK government’s ‘Net Zero by 2050’ pledge is of course an important incentive, but far from the only one. We see a lot of businesses setting their own targets, aiming higher than required and wanting to do more than the bare minimum.”
As the largest independent ESG consultancy in the in the Nordics, many businesses turn to Position Green for advice. Håkon believes that the company’s Swedish roots are an advantage, as the Scandinavian countries were early adopters when it came to measuring ESG.
“Businesses in Scandinavia started looking into their ESG values way earlier than the rest of Europe, and they have way more experience when it comes to these transitions. When Position Green was founded eight years ago, it was due to the already growing interest in ESG within the Swedish business community.”
Turning data into ESG
Founded in Malmö in 2015, Position Green started as a pure software company, collecting data for businesses who wanted to measure their ESG value.
“Founders Joachim Nahem and Daniel Gadd noticed the growing interest in sustainability at the time, and the need for a way to measure it. They realised that if businesses wanted to try to improve within the ESG and sustainability space, they would need good quality data to build their strategies on.”
Initially focusing exclusively on data collection, the business grew organically within Sweden. Five years later, the company had 40 employees and a continuously growing client base. But looking at the product offering, the team realised that the software could create even more value if it included an advisory service.
“At this point, we would only tell our clients what their situation looked like, not what to do about it, meaning they would have to look for an advisory firm to help them improve. So, we thought that we could keep the clients with us and boost the business by adding that service to our own product.”
Supported by Norwegian VC, Norvestor, the company decided to turn the software into a platform, with various features that could be used to improve ESG values. Today, users can both collect, analyse and report sustainability data, as well as access advisory services and e-learning academies.
“We wanted to support our clients through the whole journey – from inventory to policymaking. Using an investment we got from Norvestor, we acquired a Norwegian company called the Governance Group, mainly focusing on the “G” in ESG, but also offering advisory services. This was the first step in the direction of where we are today.”
Taking on the UK
Earlier this year, Position Green entered the UK. Håkon says the UK seemed like a natural next market in the expansion, not only because of the country’s growing interest in ESG, but also for its business-friendly climate.
“I believe the UK is easier, safer and less risky than other markets – especially for us, as a Scandinavian business.” Håkon says and explains: “The UK has so much in common with the Scandinavian countries, both culture wise and language wise. If we would go to another country, like Germany, we wouldn’t understand the language nor the culture, and would need to hire new people to help us with that.”
But even if the UK is an accessible market, Håkon emphasises the importance of taking differences into account and seeking support when needed. “Since our countries are so similar, it’s easy to underestimate the cultural differences and the differences when looking at the business landscape. This is the fourth technology company I’ve brought over from Scandinavia to the UK, so I’ve been through the process before and I’m aware of the common pitfalls. ”
To avoid falling into these, Håkon recommends seeking support from local agencies and organisations. “There’s a lot of support here for businesses. Personally, I’ve been working with the different Scandinavian Chambers of Commerce, as well as with the Department for Business and Trade (DBT), who has been really helpful.” Håkon explains. “Earlier this year, the DBT introduced us to a global investment management summit, which placed us in front of some senior decision makers within the investment industry, and this turned into a very important milestone. That was an ‘invite only’-event, so without the support from DBT, we wouldn’t have been able to attend.”
The DBT also helped the team prioritise where to aim its time and attention. “When you first come to the UK, you realise how there are hundreds and hundreds of events going on, and then it’s really helpful to have someone, who is not trying to sell you something, to say which people and events to prioritise.”
Continuous growth
The strategy turned into a success, and Håkon says that the response from the UK market has been outstanding. Currently working with entertainment business Abba Voyage, Position Green has already gained the confidence of some prominent brands. “We had 10-12 customers in the UK before we decided to set up a branch here, so we knew the demand existed. And since then, growth has actually come easier than we expected.”
As demand keeps growing, so does the platform. Håkon mentions several projects coming up later this year, both in terms of the product itself, and its client base. “We will keep expanding our offering. Our next addition is a service that will help businesses implement the necessary changes themselves, without having to seek help externally,” Håkon says and adds: “When it comes to collaborations, we are about to start working with a very large entertainment business, with operations in 36 different countries, which will be a major milestone for our UK branch. I really can’t wait to see what this year has in store.”
