The Mills Fabrica issues guide to ESG compliance

  • 8 December 2020
  • Strategy and branding
Report by the Hong Kong-based investor helps corporates and start-ups define their strategy, measure and communicate their impact
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The Mills Fabrica, a Hong Kong investor and business incubator focused on ‘techstyle’, has released the report ‘Techstyle impact playbook – strategies and measurement tools’. Through the ‘techstyle’ concept, The Mills Fabrica explores the connection between technology and lifestyle, such as the food and fashion industries.

This report acts as a starting guide for start-ups and corporates to create Environmental, Social and Governance (ESG) goals, define their strategy, and measure their impact while offering advice for investors to evaluate and communicate their portfolio’s impact.

The report highlights three key steps in thinking about impact strategy, measurement and communication.

The first step is defining the impact strategy and the target impact area. Identifying the target impact area helps companies navigate their purpose to develop a theory of change process, embed impact into the businesses model, collect data to measure impact, and improve services.

For investors, ESG impact evaluation starts from a well-defined sustainability-focused investment thesis, followed by due diligence. It’s also important for investors to consider how they can support and help companies improve impact by using data collected in decision-making, risk mitigation and impact maximisation.

Business impact measurement

The second step is measuring the impact. Understanding why we measure ESG and with whom to share ESG reporting is the starting point of business impact measurement. It helps businesses to analyse stakeholders’ demands, identify appropriate metrics, and monitor ESG outcomes throughout the impact measurement process.

In the report, The Mills Fabrica argued that key to this process is to understand what you want to measure for your business, as there are many existing measurement tools. The report states that companies should choose the tool that best fits their business models and objectives.

Among various standards, three key tools stand out for techstyle start-ups and corporates to get started on impact strategy and measurement. They are:

  • B Corporation
  • The United Nations Sustainable Development Goals Mapping
  • Lifecycle assessments

The report compares these three impact measurement tools in terms of key impacts, application processes and case studies.

Communicate the impact

The third step is communicating the impact. Increasing customers’ consciousness on sustainability accelerates the need for brands to communicate their impact strategy and initiatives.

Large brands, especially the publicly listed ones, usually work on ESG initiatives for public reporting to respond to investors and customers’ greater scrutiny.

For SMEs, their impact is typically more financially driven to attract funding from impact investors or pilot opportunities with brands.

The Mills Fabrica explained that companies can communicate their impact with consumers or partners via four main methods:

  • Impact measurement
  • Product development
  • Consumer engagement
  • Crossover partnership

In the report, The Mills Fabrica illustrates the concept with case studies of several sustainability-focused brands, including Allbirds, Ben & Jerry’s, Patagonia, PepsiCo and Bain Capital Double Impact.

The report is available to download from the company website.