By Stephanie Dolmat, Senior Director, ESG, Robert Half
In August, I had the opportunity to be a panelist for Protiviti’s webinar, “VISION 2030: The Future of ESG and the Strategy of Sustainable Business.” ESG is the acronym for environmental, social and governance. It can be described as a framework that helps stakeholders understand how an organization manages risks and opportunities around sustainability and social issues.
In my experience as an ESG leader for a Fortune 500 corporation, the topic couldn’t be timelier. In 2022, a global pandemic, climate emergencies, social unrest and worldwide political uncertainty have moved us past a tipping point for ESG as a business operation.
Our discussion was led by Joe Kornik, director of brand publishing for Protiviti and editor-in-chief for VISION by Protiviti. (Protiviti is a Robert Half subsidiary.) The panel included Sharadiya Dasgupta, founding partner of Blue Dot Capital, sustainability strategist Andrew Winston and Chris Wright, global leader of Protiviti’s Business Performance Improvement Solutions.
We all agreed that ESG looks different than it did just a couple of years ago, as employee and other stakeholder expectations have escalated, and business responses continue to mature around these issues. Of course, many large companies have been doing this work for years by setting aggressive goals to reduce carbon emissions and buy renewable energy. At the same time, companies are now compelled to take an explicit stance on racial inequity, LGBTQIA+ rights, pay equity and other social issues.
We’re in a whole new world — where businesses are expected to take a full role in society to proactively do the right thing, working towards fairness, taking care of the planet and investing in their communities.
Companies no longer playing defense
As I stated in the discussion, ESG is already here — whether you want it to be or not. In this age of information availability and whistleblowers, companies must address ESG reputational and brand risks.
But where many companies used to see ESG as a defensive play while seeking to protect their brand from controversy, it’s now becoming a value-add and competitive advantage for customer acquisition, talent acquisition and retention, and overall future-proofing of the business. Business leaders are learning they can’t sit on the sidelines when their whole business ecosystem is watching their ESG practices, including customers, shareholders, vendors and employees.
More than that, businesses are now expected to do more than simply react to social change — they must shape it. They need to create innovative products and services that will bring about the world their customers and employees demand.
Reporting on ESG remains challenging
ESG is diversifying and is still nascent in many areas — for example, how to measure outcomes instead of policies and practices. There is very little consensus on some of these emerging issues, and companies may not know how well they are doing against benchmarks.
Companies that have committed to significantly decreasing their carbon footprint or increasing their workforce’s diversity need to show their results. And organizations are under pressure from investors and others to deliver credible outcomes and data to overcome accusations of greenwashing or purpose-washing.
However, sometimes there is a lack of standardized, comparable data in some areas of ESG, and the requests and questions from investors and customers can seem overwhelming. Investors need to know because their customers want to know.
But there is no one-size-fits-all standard for ESG reporting — there are dozens. A talent solutions and business consulting firm like Robert Half and a consumer goods company are not facing the same challenges. While the panel agreed we would probably never get to a single reporting standard as in financial reporting, fewer would be better, and we anticipated that regulators and market forces would come together to address that problem to a large extent.
What executives should focus on now
- Start with the micro — yourself. Ask, what do I care about? What is my purpose on the planet? Starting there is a good way to prepare for jumping into ESG goals as a business.
- Think bigger. Decide what ESG goals you want to accomplish first — beginning with what is required by regulation and market forces — and then go to what you want to accomplish.
- Lead with outcomes, not reporting. Create KPIs and metrics but do it for accountability. It’s too easy to keep your eye on how to report results rather than focusing on achieving the results themselves.
- Set up the right oversight structure for your ESG programs — at management levels as well as the board level. At every level, you need people who have operational experience with the various aspects of ESG and sustainability that are material to your company, balanced with people who have strategic business responsibilities. ESG’s north star is integration across the whole business.
- Intentionally focus on the voices you are listening to and including in ESG discussions. If it’s always the same voices, nothing will change. Elevate voices across genders, abilities, ethnicities and orientations within your organization as well as to your clients and the communities where you operate. Seek to understand a wide array of perspectives and backgrounds surrounding the issues in front of you and strive for an inclusive process.
Over the horizon
When the panel was asked to look 10-15 years in the future, we offered the following predictions:
- On the tech side, things will be more different than we might expect. Our cars may not fly, but they will surely run on renewable energy. AI will have made life radically more efficient in ways that are hard to imagine now.
- Consider the impact of generational shifts. Gen Z will be in their 30s; Millennials will be 50-plus and holding key leadership positions. Their values will be fully embedded into business and government. The transparency that technology brings and what these generations expect will be much higher — everything will be out in the open.
- The climate will not be in great shape, but we will be adapting better, taking a very long view, and hopefully turning the corner on emissions and even sequestration. For companies, that means caring only about short-term shareholder value will be a memory.
Finally, we probably (hopefully?) won’t be talking about ESG anymore in 2035. It will no longer be a reporting requirement for the chief financial officer — it will be their job, and it will be baked into the normal discourse of business operations.
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