By Mike Biernik
Not every issue rises to the level of apartheid or child labor. In these cases divestiture, boycotts, or outright intervention can be justified.
Unfortunately, in our current state of AI driven, bias confirming, news ‘entertainment’ served up on social media platforms for instant consumption, overblown reactions can be common place. Demands to boycott, cancel, or drive a company out of business even due to peripheral or tangential involvement in a root societal issue are on the rise.
To pre-emptively combat this from happening to a company, they should consider implementing an ESG sustainability program.
This does not mean a company should overreact, and spend public relations dollars or engage in actions that lead to no value creation for investors, or something that drives a business to near bankruptcy. It means stakeholders need to collaborate and establish sustainability criteria for their industry that actually have an environmental or social impact, but also deliver long term value to organization performance and investors.
The Sustainability Accounting Standards Board (SASB) is a great starting point. They provide financially material topics and metrics for specific industries. These topics and metrics combined with some additional considerations added by stakeholders is the beginning. Next, establish goals that the topics and metrics can be tied to. Communication or disclosure in a form usable to the intended audience, and the company’s willingness to engage and consider changes is a key final component. With stakeholder buy-in, a process executed with thoughtful tracking and monitoring will provide the basis for a company’s ability to explain their role and impact on ESG issues.
Using a rational approach, a business can help promote the common sense notion with data and illustrative statements, that a business cannot be sustainable and impact anything, if it is out of business.