In this blog we discuss how third-party risks affect your organization, and how ESG principles can help.
In today’s business landscape, you should be concerned not only with your own reputation and brand, but the reputations of your third party suppliers. Stakeholders are demanding transparency on ESG risks throughout their entire value chain, including you and your suppliers.
The Economist recently ran an article titled Facebook and the conglomerate curse, and it addresses the future of ESG . The article is about “Silicon Valley’s big five tech giants, Alphabet, Amazon, Apple, Meta and Microsoft.” It comments on their drop in market value this year, swollen costs, and slowing core businesses, alongside the “near-absolute control” of the companies’ founders.
If you are challenged by your boss, board, or shareholders, show them the the potential harm to others. Then show them the data that proves that the costs, and the length of time that you will continue to pay those costs, are too high and too long for you not to do the right thing.
The UN Global Compact’s Guide to Corporate Sustainability is an excellent resource for understanding what it takes to run a sustainable business. It talks about operations, taking action, top-level commitment, corporate culture, and communications.
A substantial amount of work that is being done in the ESG arena is by non-regulators. These include customers, investors, lenders, proxy advisors, ESG raters, credit rating agencies, and insurance companies. Let’s take a look at a few.
Businesses need not choose between shareholder interests, on the one hand, or social and environmental interests on the other. It is not a competitive, zero-sum game. If a company prioritizes employees so it comes out ahead in the war for talent, and it values customers and designs products they trust, shareholders will win, too.
ESG is a set of metrics that a company and others can use to assess how
E: environmental issues like carbon emissions, and the use and availability of clean water,
S: social issues like indentured and slave labor, and employee health and safety, and
G: governance issues like who has decision-making power within an organization
affect company performance, and in turn how its operations impact the environment and society. There is a dual utility to ESG metrics. They can be used both to look inward at a company’s performance, and outward at how the company impacts the world.
Sustainability law is an emerging area where there is an opportunity to shape a cohesive legal corpus. As this body of law emerges, the leading edge will be cut by legislatures and the courts, but there is likewise an opportunity for practicing lawyers, academics, and chief legal officers and their teams to shape the law.
How does business dehumanize, and how can it promote humanity? Are there business opportunities that arise from focusing on humans when designing a business, a product or a service?
Your business activity has financial, as well as internal and external ESG impacts. You need to measure all three to calculate your true ROI.
Sustainability means meeting today’s needs without jeopardizing the ability of future generations to meet theirs.
Understand your company’s impacts to the economy, the environment, and/or society. GRI (Global Reporting Initiative) standards.
Developing an ESG strategy starts with knowing which environmental, social and governance goals are critical to your business strategy and success.
