E, S & G are Separate but Inseparable
But how do I start to build ESG and PPP into my company?
- Attention on topics such as fraud, cyber security, and financial propriety has spawned a massive risk management industry looking at the governance aspect.
- Climate change is driving discussion, action, and investment on the Environment aspect.
- Societal changes and evolving expectations are driving initiatives such as Diversity, Equity and Inclusion (DEI) among many others.
Each of these is in itself a massive area; it's no wonder that we try to break it down into manageable chunks.
But these 3 elements are actually inseparable. They form 3 key components of an ecological 'complex system'; achieving and maintaining balance is the goal, and sustainability is the outcome. For example, profit can be (and has been) achieved by exploitation of environment and people. Focusing on social (the me, me, me effect) can result in excessive resource consumption, and poor management practices. A focus on the environment creates disengagement and ultimately pushback from people - often from increasingly draconian policies.
The interaction between Environment/Planet, Social/People, and Governance/Prosperity are interrelated and mutually reinforcing. Achieving sustainability requires an holistic approach that integrates all three elements. So how can we do that?
The first thing is 'just start', but with the new lens of seeing how any activity or initiative can or will have a broader impact and may need a broader input to be effective.
Here's an example of a small technology company that decided to implement some cultural changes based on a DEI framework:
- Social / People Impact: The changes created a more positive (fun, rewarding, satisfying, respectful) work environment. People wanted to stay (less churn) and new people wanted to apply to work there (great place to work). Corporate knowledge grew and so did the people (professionally and personally).
- Environment / Planet Impact: This increased engagement resulted in improved (ie more efficient and effective) processes which meant reduced operating costs for an increased output (which grew as quality improved) - more cash available for reinvestment. Lower internal resource usage (including energy) and careful selection of suppliers resulted in lower carbon footprint. Staff identified that they wanted to carry out regular community / environmental projects (park clean-ups etc)
- Governance / Prosperity Impact: The initiative demonstrated good governance practices - but was itself a governance initiative. But the initiative also promoted better / fairer decision making (ie took in broader perspectives from a more included and consulted workforce) and provided greater transparency and accountability - again having a positive impact on employees. Great branding.
ESG sounds a bit 'enterprise level' and daunting, but its principles can be applied anywhere. And any company can take a first step - even a small one - and then build on that.
What's your first / next step?
Graham