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ESG Mindset

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ESG Mindset

Business Resilience and Sustainable Growth

Kogan Page,

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Mainstreaming ESG practices in business fosters long-term transformation.

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Editorial Rating

8

Qualities

  • Applicable
  • Background
  • Concrete Examples

Recommendation

Leaders in publicly traded industries may face pressure to align with Environmental, Social, and Governance (ESG) practices for long-term sustainability. Those pressures can challenge their corporate culture. ESG, which emerged as a financial tool in the 2000s, offers opportunities for transformation and growth. However, as author Matthew Sekol reports, deployment can raise issues. Different types of businesses define ESG to fit their brands or strategies, so regulating across industries can prove difficult. The “intangibles” underpinning these initiatives may tempt leaders to cut it to its “simplest form,” but they should not risk diluting ESG’s relevance. Sekol’s message: If you’re going to do it, make it businesslike, make it real, and make it matter.

Summary

Environmental, Social, and Governance (ESG) practices mean different things to different organizations.

ESG has its roots in Corporate Social Responsibility (CSR) and Socially Responsible Investing (SRI). However, ESG differentiated itself from both by 2004 with its broader definition of “material value” and its willingness to deal with intangibles that can affect a company’s value.  ESG has three pillars:

  • Environmental – How the company affects the planet in its use of resources and its sustainability practices across its value chain. 
  • Social – How the company prioritizes diversity, equity, and inclusion (DEI) and protects its labor force from exploitation.
  • Governance – How the company’s board and executives engage with values, ethics, and purpose and practice strong accountability and transparency.

ESG remains difficult to define because it links intangible values with material, measurable results.

Every enterprise and industry has its own operating principles and mission, ...

About the Author

Matthew Sekol is an ESG and sustainability advocate at Microsoft. 

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    I. H. 3 months ago
    Awesome! Truely agree, as this is now vital in reports of any major oil, gas, petroleum and energy producing companies globally. Great reading.