EESG, the new ESG

When John Elkington brought the term “Triple Bottom Line” to life, in his classic book “Cannibals with Forks”, in 1994, he brought to the sustainability professionals a clear reference of what to do. In his own words, “ ‘Triple Bottom Line’ is the expansion of the traditional financial reporting framework to incorporate environmental and social performance in addition to financial performance.” We have been working on this since then (and even before that, but we did not have a term that could define the movement then). Such factors to which Elkington makes reference, and that should be incorporated to the economic mainstream, are the three famous letters ESG – Environmental, Social and Governance.

Those three letters were never as famous as they have been since the beginning of this year. In fact, they have been in the spotlight since August 2019, when almost 200 CEOs, members of the “Business Roundtable”, an American non-profit association created in 1972, made a public announcement about radically changing paths in their corporations. Breaking with their 20-year-old companies’ traditional practice, one which aimed, above all, at maximizing the profit of the shareholders, they announced that the objectives of their companies would from then on be amplified to also favor their employees, clients and the communities in which they acted.

Then, earlier in 2020, Larry Fink, BlackRock’s CEO, stated in his annual letter that his company, the world’s biggest investment management corporation, currently managing around USD 7 trillion in assets, has centered their investment policies on sustainability. Those who did not know what ESG is, suddenly went looking for answers. And then there was Davos, supporting the “Stakeholders’ Capitalism”, the most commented term during the World Economic Forum. No wonder all this happened. Year after year, being higher and higher in the ranking of the main risks listed by the Forum in the “Global Risks Report”, the letter ‘E’ in ESG (environmental factors) represented nothing less than the first five “likely to happen” risks, and three out of the five risks related to impact.

There was no competition. ESG became a widely spread term, discussed in newspapers, radio programs, gyms, schools. Great! However, for us to really change our ways to do business, produce, invest, consume and behave, we should, in fact, be talking about EESG – Economic, Environmental, Social and Governance. In other words, we definitely need to bring the “E” from the word “Economic” inside, together and incorporated to the other ESG factors. Or the other way round. It doesn’t matter. This way, we will not be running maybe the highest risk for those who work with sustainability: to be seen as someone from a parallel world. Something like hearing someone say: “While we make money here (‘E’ from “Economic’), you take care of those issues there (the ESG agenda).

I’m a journalist. I have been working with communication for 33 years. I believe in the power and influence of words and terms to define movements and tendencies. When a CEO or chairman/woman starts using the expression EESG instead of ESG, many messages will be given at the same time. Some of them are: there is no way to separate the world; something always interferes with something else; environmental, social and governance factors can impact the financial results positively or negatively; financial investment and strategic planning should take this agenda into consideration in their definition. And so on.

Fifteen years ago, when I started working with sustainability, or when “Cannibals with Forks” was first published, there was no other way. We had to expand the concept and explain there is a world beyond the financial level: the ESG world. We are past that point, however. A number of events have shown us that looking at the businesses only through the economic prism is actually a kind of myopia, one which puts the survival of the companies at risk. We have finally reached the EESG phase. It is now time to speed up the process on “how” to implement all this interconnected agenda, even more so because we are now – more than ever – aware of how interconnected we all are (leave it to the coronavirus, subject for another future article...).

I believe that the process of incorporating a sustainability agenda to a company can go through three possible paths: love (when the top management understands and believes in it), pain (when there is either a financial or a market value loss, or a reputation or image damage, because the agenda was not taken into consideration), and intelligence (when the management understands that this is an inescapable movement that leads all the world). I work hard for it and hope the paths we go through in this journey towards a truly sustainably interconnected world - the EESG world - are always the ones of love and intelligence.