The E in ESG: Strategy before Story
The E in ESG?curates the week’s latest?#sustainability?news; focusing on regulatory developments, innovation, and the intersection of?#environmental?and organizational best practices.
This week's Newsletter includes:
Every day, you read stories about companies making bold environmental or social impact announcements: “We will be net zero in the next five years.” “Our products are now made from 75% recycled materials.” “We’re making a multi-million-dollar investment in our community.”
I like to tell clients that the “S” in “ESG” stands for “strategy,” not “story.” (Of course, it actually stands for “social,” as in “social impact,” but this helps to make the point.) Everyone has a sustainability story to tell. But in the race to prove their impact, many companies put their story before their strategy. Getting in front of your skis like this can be risky because it can lead to criticism and even greenwashing, which is when a company overstates or is less than fully forthcoming about its environmental commitments and impact.
Harvard Business Review: Why Business Leaders Must Resist the Anti-ESG Movement
The culture wars in the U.S. continue to rage, and they’ve come for business. Companies are being dragged into issues that stir emotions, such as abortion, gay and trans rights, racial and gender equity, and climate change. In particular, business is facing questions about its stance on societal issues mainly from the right side of the political aisle. So with?70% of America’s top execs calling themselves Republicans, business leaders now find themselves in an odd position: accused by high-profile members and pundits from their own party of being part of a “woke” or “anti-ESG” progressive agenda.
For many companies, it may seem smart to stay out of anyone’s crosshairs. But try as they might, there’s no avoiding taking positions on the big issues of the day — major stakeholders, particularly young customers and employees, expect it.
Preparing for and figuring out a response to accusations of “woke-ness” is now a top leadership priority, so let’s unpack what’s going on. We’ll start with the most prominent examples facing organizations today. Then, I’ll outline what leaders should consider going forward in light of today’s political attacks.
From real estate companies to manufacturers, see how businesses are working with IBM and using their software to connect and analyze data with AI. Now, they can pinpoint inefficiencies and act on them to help save money, energy and emissions
The truth about the mainframe computer is not what you think it is. IBM's Z-series and LinuxONE platforms don't look much like the mainframes of old. Nevertheless, these machines provide the highest levels of reliability, predictable performance, and linear scalability available on the market. What might surprise you is that the IBM Z-series and LinuxONE platforms also offer up one of the best sustainability stories of any computer architecture available today. Moreover, IBM is now making that sustainability more accessible with new data center-friendly racked configurations.
Sustainability is a crucial topic for IBM. Marcel Mitran, IBM Fellow and CTO for IBM zSystems and LinuxONE, told us that “reducing data center energy consumption is a tangible way to decrease the impact on the environment, and key architectural advantages help distinguish both IBM z16 and LinuxONE for sustainability,?especially when consolidating x86 workloads in the data center.”
It has been fascinating and energizing to see the evolution of thinking and practice about the role and responsibilities of business in society, the maturing of the field and the growing understanding that businesses can find profitable solutions to the problems of people and planet.
There is one topic, though, that has stayed largely invisible and that’s disability. There are some notable exceptions: the British organisation Business Disability International (originally the Employers’ Forum on Disability), established by the indefatigable social entrepreneur Susan Scott-Parker), has been engaging businesses on disability as a workplace and a marketplace issue for more than 30 years.
Yet disability has largely been absent from the work of the responsible business coalitions across the world, and from the programmes of sustainability conferences.
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Even when there are conference sessions on diversity, equity and inclusion, the discussion tends to focus on gender and race (and sometimes sexual orientation and age), but rarely disability.
Yet we disabled people account for 15% of the world’s population – that’s 1.2 billion people. If disability was a country, it would be the world’s third-largest.
MSCI’s pending downgrades to the ESG ratings on thousands of funds is the latest quirk highlighting the?murkiness?of sustainable investing — but they’re also part of a global trend toward tighter standards in what is and isn’t green.
Last week, the ratings firm?announced?that it would be nixing an “adjustment factor” in its assessment of ESG. That adjustment, which considered a fund’s exposure to companies with improving ESG ratings, gave a boost to the scores on nearly two-thirds of the mutual funds and exchange-traded funds that MSCI covers.
As a result, nearly all of the 20% of funds with the highest AAA ESG rating will lose that grade, falling to AA or lower. Currently, about a third of funds have an AA rating, and that proportion will drop to just over 22% when the new standard is applied.
“In this new era where improvement in ESG is the status quo, we believe that the threshold required to receive a top ‘AA’ or ‘AAA’ rating should be more rigorous and ambitious,” according to a paper by Rumi Mahmood, head of ESG and climate fund research at MSCI. “This is a one-time calibration of the entire universe of funds and not indicative of more downgrades to come. In effect, the goal posts are shifting, rather than any funds becoming worse as a result of their current allocations.”
Roughly 31,000 funds globally will get lower ESG scores, Mahmood wrote.
UPCOMING EVENTS
April 19:?Sustainability LIVE New York
Don't miss?Sarah Thuo's Keynote session!?Sustainability Magazine
Paul Houde, MBA,?Galina Mishiev,?Dianna Heard,?Miao Zhang-Cohen,?Nicole Park,?Dorothy Quincy,?Matt Hodak,?Richard Douglass
Client Technology Specialist at IBM
1 年Sustainability is a crucial topic for IBM. Marcel Mitran, IBM Fellow and CTO for IBM zSystems and LinuxONE, told us that “reducing data center energy consumption is a tangible way to decrease the impact on the environment, and key architectural advantages help distinguish both IBM z16 and LinuxONE for sustainability,?especially when consolidating x86 workloads in the data center.”