What does embracing ESG principles actually look like?

In my first contribution of the year, I explored how Environmental, Social and Governance (ESG) principles are firmly rooted in humanity’s tendency towards justice and fairness. And, being that companies – whether they like it or not – form part of society, and society is made up of us humans, they too have as role to play in ensuring a more equitable and liveable world.

We also delved into how ESGs overlap with each and every one of the world’s Sustainable Development Goals (SDGs), but what does this all mean in practice?

ESGs, SDGs… I’m sure we all agree that acronyms are catchy, but they can also be used uncritically as a buzzword, popped on a company website to look good, or brought up in a conversation to impress our interlocutors.

So, I think it worth imagining with you, here and now, how a company could stay true to that innate human fairness thanks to and through the ESGs. In other words, what does embracing the ESGs actually look like?

I’m going to start from the G and make my way back to the E.

First and foremost, any decision taken by a company, whether it’s about firing employees, doubling sales, expanding to a foreign market or reducing carbon footprint, irrevocably has to do with governance. Good decisions stem from good governance and good governance must necessarily rest on several key principles. There has to be leadership of course, a leadership that is not only clear about purpose and direction, but also able to nurture a new generation of leaders and ready to step down to make space for others. Former Prime Minister Jacinda Ardern has recently showed the world what this kind of leadership looks like. There also has to be transparency, because any organisation has to be accountable to its clients and society more generally.

Information concerning how decisions are made internally and externally — whether it’s about hiring practices or partnering with another company — need to be accessible to literally any citizen. Finally, there has to be structure and there have to be processes in place that make sense, that actually aid the effective running of the organisation and support swift and fair decision-making. We all know what happens when policies and processes exist not to help us, but to make our life harder. Convoluted mechanisms that appear meaningless are harmful and also counterproductive — they create disaffection and ultimately waste the company’s resources. When on the other hand, good leadership, transparency and effective processes exist, a company functions better and its employees are happier. This is what a fair and equitable G looks like.

Onto the S. You might agree with me that some companies are literally small micro-cosmos, especially the ones where things work, and they work well. Employees go to the office, they may head to the gym to which they have free access to thanks to company policy, they finish work and may even choose to spend time with their colleagues. For most of us, a large part of life, ultimately revolves around work. Yet companies are embedded in broader society and we just cannot ignore that, both as employees, and most importantly, as employers.

We can’t turn a blind eye to what’s going on outside the company’s doors, to how society is changing and shifting, and we simply cannot avoid asking ourselves what we can do to reflect these changes in our company life and structure. At a very basic level, this means ensuring that our workforce is diverse, because it is undeniable that our societies are increasingly more diverse, not just in terms of nationalities and ethnicities, but on all levels, whether it’s gender, sexual orientation, culture or religion that we’re talking about. While it’s easy to blame a lot of our sorrows on those who we see as “different” to us, this really doesn’t help us or them. However, the point here is not just about welcoming diversity in the business world, but it’s also about ensuring greater equality in a way that is fair (let us not forget about our basic human instincts!) [hyperlink to part one of contribution].

We can’t always have the same kind of people in senior roles, we can’t make it so hard for women to sit on company boards, we can’t make it impossible for foreigners to reach leadership positions. If companies do this, and sadly quite a few companies still do this, what message are they — and we as a society — sending out to youth and young people? We’re literally showing the little girl who aspires to do great things that she’s probably going to fail, not because she’s no good — although she’ll probably end up thinking that — but because there are still bad practices around, that are going to make the achievement of her goals a lot harder. We’re also implicitly telling the talented first or second generation migrant that we’re only accepting them to a certain extent, so long as they don’t aspire for “too much”. More fairness and equality in the S of ESGs entails fighting these tendencies, within companies of course, but in other settings and all other aspects of life too.

We are left with the E. The E of ESGs is a letter that we often take for granted, especially here in Malta. We walk on our beautiful beaches and we just assume that they’re always going to look the same, that they’re always going to be there. And of course, I do hope they’re always going to be there and look as stunning as they do today. Really and truly however, there are changes at work on this planet that are cause for concern. While we talk about climate change as a big, evil monster that no one has control over, climate change is a product and a result of human choices, often bad choices, choices that completely dismissed that natural inclination towards fairness and equality that I keep on going back to. Companies and governments are the first that need reminding that they have strayed away. We all know that here in Malta for instance, we’ll eventually start running out of space for buildings. Sure, we can go higher, but is this what we really want? Looking at the environment with fairness and equality in mind means weighing up corporate, government and even individual decisions, to make sure that they don’t have negative repercussions on our land, on the land of others — let’s think for one about the natural disasters in many low-income caused largely by Western CO2 emissions — and more generally on the planet that is hosting us.

If you’re here reading this today and are thinking — it’s all well and good, but I’m not the director of a company and I can’t really change the course of things — let me remind you that change often starts small. It can start from any of us, from a small group of individuals who decide to pay heed to some key aspects that make up the very essence of their being human: fairness and equality.

If you own or work for a small business, and need the tools and support to implement ESG in a simple but effective manner, drop us a line on [email protected] or learn more here.