ESG - Why it matters so much

ESG - Why it matters so much

Many of us might remember 3 new letters entering the lexicon of business strategy and the world of work: CSR.?

Corporate Social Responsibility was the new way to describe organisations’ focus beyond their profits, shareholder returns or (in the case of non-profits) operating within budget.

We now have three new letters: ESG.

Environmental, Social and Governance. Personally, it is nice to see the environmental aspects of the world of work given a specific mention, as, after all, we are in a state of Climate Emergency and recognised ecological systems degradation. Dangerously so. Whether you are pro-XR (Extinction Rebellion), ambivalent about our climate or do not believe the damaged state of the planet’s natural ecosystems is man-made.

For the avoidance of doubt: the UN 2021 Climate Science Report makes for stark reading.

The headlines of the report are that we’re still way off the Paris Agreement measures despite some results that appeared in the earliest days of our COVID-19 response and the resultant operating slowdown.

ESG is therefore very much in the spotlight; as we create a post-pandemic way of living and working. But what specifically does ESG mean, what should ESG do and how do we - wherever we are in the working framework - play a part in ESG?

Let’s look first at sentiment and some recent published research and reflections from YuLife (quoting Cone Communication’s 2016 survey and AON’s 2022 report).

?Younger generations are strong in considering where to work and even reducing their expectations on their salary package based on how climate-pro an organisation is.

So choice and compensation are impacted by a company’s ecological stance.

And commitment is another alliterative reference point for ESG strategies and actions.?Because both the company’s commitment to reducing its carbon footprint, sponsoring climate-positive initiatives and making very conscious decisions about partners, suppliers, materials, and their own compliance and positive action, create a more lasting impact on loyalty and dedication from their own colleagues.

And staying alliterative, consciousness is also what ESG? can stand for. Active information sharing, learning and knowledge growing about the implications of running a 21st-century business and its need to be focused on environmental and social aspects of its governance, decision making and operations.

There is an obligation to us all to ensure that ESG isn’t just regulations, it is about communications, engagement, ideas and actions. So with a raised level of consciousness, we’re more like to see people’s habits, choices and activities change for the better.

As a? leader in a climate-positive Certified BCorporation, much of our team dialogue is on sustainability and positive action on the environment that goes beyond our operational choices and into our personal lives with energy choices, buying habits, upcycling and the circular economy.

So if these are the principles we’ll centre our suggested actions on because the one thing ESG cannot become is a talking shop and posturing in intent. It’s about action.

Let's now unpack those alliterative phrases and show what they mean from an ESG perspective

First, choice.

Your employer brand - website and company social posts - need to reflect the nature of your ESG stance and showcase the positive and committed things you are doing as a company. This will help prospective candidates make a more informed decision about whether to apply to your company for any vacancies you have. And people do their digging around, so this needs to be genuine, substantiated and if you had past blemishes explain that to people upfront. Norwegian waste company Norsk Gjenvinning Group did exactly that when tidying up its recycling and materials disposal operations. YuLife’s paper Doing Well By Doing Good asked people to imagine working for a company that’s investing in causes to tackle climate change and environmental issues.? 62% of UK respondents said it would make them think more positively about their company.

Next, compensation.

The hot topic of now is the cost-of-living crises and wages. We’ve all seen the race to perks in trying to incentive people to join however, a more ethical and ecological stance is where you could add environmental contributions to your salary packages. Sponsoring climate-positive projects and solar, wind and hydro energy provision, recycling and sharing economy options could also give you a chance to add benefits like bonuses not based on sales, but on the environmental impact of how people work. This has been done well by pioneering company Webmart and their wholly-owned rewilding and “oxygen farm” in rural Scotland which their teams know some of the company profit/financial shares goes towards.

And there's commitment.

In sensing how much of a balance to strike between being a sustainably high-performing organisation and then performing well and being high on sustainability, that’s a difficult choice. What’s evident is when you turn over activism, ideation and implementation of green futures initiatives to your own teams, you get commitment from a business/product sense to more ecologically sound practices and committed people who’ve generated those savings and positive increments. One such enterprise here is Frog Bikes. Cycles built for children, that can be returned, refreshed and resold as children outgrow their bikes. Not only is this more sustainable anyway, but as the business grew, the teams wanted to reduce the usage of natural assets and shipping costs. One such initiative was the safe removal of a few spokes per wheel saving tonnes of steel and thereby carbon impacts on production and use of raw materials. All of this came from ESG commitments and committed teams experimenting with ideas.

And finally, consciousness is where ESG can be a loudhailer for what matters. Unilever successfully introduced more ethical production of their tea brands based on the naturally fertilised Kericho Plantation in Kenya. This model allowed them to be the first brand to successfully have the Rainforest Alliance badge on their products in the early 2000s and symbolised consumer shifts to more ethical and sustainable products even in low-margin areas. This consciousness pricked the rest of the industry to follow suit and Fair-Trade and Rainforest Alliance become hallmarks of quality and sustainability. ESG championing causes like this raises consciousness in employees, the supply chain and ultimately consumers.

So if ESG is meant to do something good for the planet AND raise the prosperity levels of people and performance in an organisation; choice, compensation, commitment and consciousness are 4 strong pillars of inquiry and action we might all need to take heed of and introduce.

At YuLife and People and Transformational HR, we stand strongly behind ESG and wish to see it go beyond its compliance remit. We believe ESG should drive business and colleague choices on how to operate and act, with business ultimately being a force for good.?

Extraordinarily Sustainably Good perhaps?

Perry Timms

31 August 2022

Perry is the Founder and Chief Energy Officer of People and Transformational HR Ltd (PTHR) and is a Chartered Member of the CIPD, a fellow of the RSA and Visiting Professor at 4x Business Schools in the UK. Perry is a 3x published author; a 2x TEDx Speaker and 5x Member of HR’s Most Influential Thinkers List ranking Number 1 in 2022.

PTHR is climate positive, a Certified BCorporation and was in the Top 5 Globally in Governance in BCorp’s Better for the World 2022 ratings.

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