I am really surprised how few people talk about implementing an ESG program to prevent, find and fix ESG related problems or improving your organization’s ESG metrics. If you want an example of what I am talking about, go read the first paragraph on Wikipedia under the Environmental, Social, and Corporate Governance section. At the time of this writing, there was not a single sentence suggesting that you should look for ESG problems or how to look for them. It doesn’t talk about improving your current ESG metrics. I attended a few sessions of an ESG conference coordinated by a major player in the financial journalism field and did not hear any discussion about how to set up an ESG program.
Isn’t that the point of all this? Aren’t we implementing ESG programs to build a culture that will attract and retain the best employees? Don’t we want to find the biggest contributor to CO2 emissions in our organization and try to reduce it? Aren’t we implementing ESG programs to ensure that our ESG activities don’t become bloated and distract us from our mission or bankrupt our organization? None of that is going to happen if we keep talking about the need to implement an ESG program and not move on to implementing an effective ESG program. I think part of the problem is the people that got us this far were experts at pointing at problems, disparaging companies, and complaining… but not expert at setting up an ESG program in a company. We are harnessing the ability and resources of the business community to set up a process to help make the world a better place. Once businesses are behind ESG… real progress will be made because businesses have the resources, are skilled at developing processes and are results oriented. The future is brighter than we think… in my humble opinion. However, we have to move on and involve people in our ESG programs that have the right stuff.
Look at my last post entitled “ESG – Not just a cost center” on the Osprey Soul of ESG Blog that lists 13 benefits of implementing an effective ESG program. I discussed the classic benefit of reducing fines, penalties and avoiding death by activists on social media but there is so much more. In fact, I list 12 other benefits. The current “ESG experts” are just talking about investors, investors, investors. They are saying we have to implement ESG programs to appease investors. Anyone with any real ESG acumen would have known that several years ago when one of the largest investors in the world, Mr. Fink at Blackrock, started sending annual letters to CEOs telling them that he won’t invest in ESG clueless companies. Let’s move on, we got the message.
Let’s start talking about auditing to find problems. Let’s talk about conducting employee education to get their help to prevent ESG problems. Let’s start writing realistic and effective ESG policies. Let’s talk about conducting investigations into potential ESG issues that are common to our industry. Let’s put high ESG risk areas in the hands of responsible people rather than in the hands of those who think greenwashing is the solution to our ESG problems. Let’s talk about setting up anonymous reporting mechanisms that stake holders can use to report ESG problems that we can then fix. What about conducting a risk assessment to see where we can put our limited ESG resources? Let’s get legal, ethics, compliance, audit, risk, HR and other departments involved in the solution. Let’s talk to leadership and the board about crafting a message to stakeholders that convey our ESG acumen and commitment from the top. Let’s craft a message from leadership that will inspire all employees and comfort companies that want to use us as a supplier because they don’t want suppliers to get them into ESG trouble.
The people who are often assigned to ESG think ESG is all about cherry picking our best ESG metrics to include in the annual report and then exaggerate that limited ESG data set so that investors buy our stock. The “ESG experts” spun so hard that society created a new word to describe their unethical behavior… greenwashing. If your job is to market the company or communicate nothing but good news to the outside world… you are a potential ESG risk area. You are welcome to help the ESG program, but you cannot run it. You are conflicted. We have not dealt with all the ESG problems because people were hiding the bad ESG news and telling everyone everything is great. Hiding bad news is a risk area because the problems metastasize if they aren’t dealt with. ESG experts? No, these people are not ESG experts… they are an ESG risk area.
What about educating the board? The information our boards are getting “on the street” about ESG is not only superficial… its often wrong. Boards need deprogramming after talking to the current “ESG experts”. There are too many myths and not enough facts about ESG, which happens when the hair on fire crowd is the last group of “ESG experts” that your board has listened to. And most importantly… let’s talk about how to find an ideal ESG Officer and avoid hiring the activist who tells employees to, “Be less white.” Our job is to build a better environment and culture to attract and retain good employees. Our job is not to insult our employees, drive off good employees and handicap HR’s hiring process by having a bad ESG reputation. Don’t forget the months of bad press on social media in which people suggest our employee education slide deck should not include the phrase, “Be less white” as was the case at Coca-Cola.
I see a lot of finger pointing. I don’t see a lot of people moving past the, “All companies are bad and all leaders are bad,” conversation. We had these people in the compliance and ethics profession too… I called them the Pointer Sisters. They never fixed anything or even proposed how to fix anything. The Pointer Sisters just pointed at people, said, “You are bad” and acted as if finger pointing is a solution to our ESG problems. Not only is that not critical thinking, it lacks integrity. We got the message and now we need to move onto stage two in the evolution of ESG programs. We now need to send in an “ESG surgeon” (ESG Officer) to operate on our ESG program weaknesses. Screaming while “operating” in a business environment, does not work. Screaming doesn’t impress business people who have a propensity for calmly getting things done rather than just ranting about the need to get things done. The Pointer Sisters are not going to get us to the finish line. We need to improve our organization’s ESG metrics. We need to prevent the ESG program from distracting the company from its mission. We need an ESG expert that will prevent the ESG program from becoming bloated and creating financial distress for our company. If we don’t stop screaming and get something done, the “ESG experts” will discourage everyone and kill the ESG movement. We can’t let that happen.
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