Tug Of War
ESG standards clash. Not every good directive points the same way. While societal, environmental and governance concerns are often interlinked, there can be an inherent conflict and contradiction when pursuing separate sustainability goals.
Consider electrification – often cited as a solution to cutting carbon emissions. You may decide to make use of advancing battery technologies to power your business with renewable energy and reduce your carbon footprint.
But to ‘electrify’ the world, vital minerals must be mined. Some of these extractive processes have links to child labour and human rights abuses. The world’s largest tech companies have recently become embroiled in legal action due to supply chain exposures.
ESG goals might also conflict across your business’ jurisdictions. Consider regional nuances when collecting data on workforce race, ethnicity and gender due to different business cultures, traditions and laws. Yet, stakeholders still demand transparency over inclusivity. This means the diversity data gap has significant financial repercussions as the $30 trillion ESG investing market avoids more opaque regions.
Meaningful sustainability reaches beyond ratings criteria, beyond basic due diligence.
It is essential to take a step back to ensure the ‘E’ doesn’t cancel the ‘S’, to ensure environmental efforts don’t have undesirable social consequences. The ‘box-ticking’ simplicity of pitting one sustainability category against another won’t cut it.
Regulators, consumers and employees want a genuine commitment to sustainability and tangible impact with all the messiness that implies.
Meaningful business sustainability is focused, innovative and complex enough to address business’ five capitals - the financial, manufactured, social, natural and human cost and impact of your company. This takes time and resources. And bravery. Beyond the metrics, mess and mistakes are inevitable. But stakeholders undoubtedly prefer transparent reports of progress, over corporate obfuscation whilst you strive for ESG perfection in private.
Look up from reductive ESG metrics to locate your team in a whole, wide, connected world of better business.
