Monday
October 3
2022

Analysis: Governance As The Force For Real Change In The ESG World

By Susana Sierra

When companies don’t have coherence between what they say and what they do, or when they define themselves through marketing hype that does not reflect their true intentions or thoughts, the truth comes to light sooner rather than later.

Today, walking your walk rather than just talking the talk is more valued than ever by consumers. To achieve this, it is not enough to merely hoist fashionable flags. Companies must be sure about what their values and purpose are—especially since we are in the midst of a dizzying and uncertain global scenario, where the political, economic, sociocultural and environmental paradigms have undergone transformations in which technology plays a key role. The challenge will be to adapt with conviction, not just as a slogan. Businesses need to rethink who and what they are, where they are going and how to get there; but most importantly, they need to understand the why behind their goals.

Environmental, Social and Governance (ESG) criteria is a very good starting point for companies to resolve these questions and adapt to changes. However, to do so consistently, I believe it is necessary to be especially conscious of the “G”—that is, their governance model. This means that corporate decision makers and influencers—including the board of directors, CEOs, managers and shareholders—need to create a culture of genuine transparency, honesty and respect for environmental and social values. If the company leadership does not know its purpose, why the business exists, its values and how the company can grow and develop in harmony with the environment, corporate executives could get lost in the search for momentary solutions, losing focus and falling into bad practices, which in the long run will lead to the destruction of the company.

Photo courtesy of debannja.

Source: Forbes (link opens in a new window)

Categories
Investing
Tags
business development, climate change, environment, ESG investing, governance, impact investing, social impact, sustainability