Ethical Impact: The importance of prioritising an Environmental Social Governance (ESG) Strategy

 

We have been called to action. 

Traditionally organisations were challenged to balance corporate social responsibility with increasing revenue and cost optimisation. Currently organisations have been called to action: to effectively and rapidly introduce an ethical Environment, Social and Governance (ESG) strategy.  A clear ESG strategy is executed through ESG goals (a set target that would need to be achieved to address a particular ESG issue) and a regenerative / change mindset and culture. 

Those who have already embarked on this journey are likely to be experiencing several challenges which are explored in detail during this discussion. These include conflicting ESG goals, the need to adapt governance and to ethically report on the progress of these goals to a variety of expectant stakeholders. 

Firstly, ESG goals can include carbon neutral, net-zero carbon, circular economy, biodiversity, ethical raw products, re-used and renewable, diversity, ethics, gender equality, partnership goals, innovation, health and wellbeing. These goals currently compete with profit and each other. 

Cyrus Mewawalla of GlobalData, suggests “The reluctance of many CEOs to fully engage with sustainability can be attributed to the age-old view that it will hurt profits. However, GlobalData’s research suggests the opposite. Companies that embrace all three elements of ESG will outperform their peers. CEOs that are too slow to improve their company’s approach to sustainability will see an exodus of customers and a drop in profits far sooner than they ever imagined.” 

How we address conflicting goals introduces the second challenge of how we adapt our governance to measure and manage our ESG agenda. 

According to the Global Data survey, 2022, two thirds of executives reported that “inadequate governance practices make it more likely that companies will fail to meet their ESG goals.” 

Return of Investment (ROI), prioritisation, risk management and data governance will need to be adjusted to include ESG goals to balance profit with planet. Milestones will need to be clear and escalations will need to acted upon both timeously and effectively.  Governance will need to include the upskilling of practitioners to sharpen their sustainability orchestration, transformation and education across the organisation to introduce and mature a regenerative change mindset. 

An ethical decision-making framework will need to be introduced or adapted to enhance the governance, for complex and competing ethical decision making. Organisations will need to continue to focus on a culture of Responsibility, Respect, Fairness and Honesty to create a systemic environment from the PMI Code of Ethics and Professional Conduct. 

The third challenge is to ethically report on the progress of ESG goals - managing varied stakeholder expectations. These differ according to drivers and intent, both internally and externally. These range from shareholders, empowered employees, board members, influencers / brand ambassadors and product consumers.  What will the accountability of an organisation be to its stakeholders for not meeting their ESG goals? Will this be scrutinised and measured with interest and intent as much as profit? Regardless of how we will assess our ESG goals in the short and long term, it is encouraged that progress against ESG goals are reported honestly and authentically. 

In conclusion, the discussion of the introduction / advancement of an ESG strategy and goals is timeous with the recent launch of PMI’s ESG hub and partnership with Green Project Management (GPM).