by Roy Snell
I am going to go live in a shack in the woods of Northwest Ontario if I hear one more investment advisor, activist, or an “I hate ESG business leader” describe what ESG is. They are not in the ballpark of being remotely helpful about understanding ESG. They are looking at it so narrowly and typically so biased, that it’s just not helpful to people or companies that want to use ESG to make the world a better place. They almost never talk about preventing, finding and fixing environmental, social or governance issues in a company. ISN’T THAT WHAT THIS IS ALL ABOUT?
I am going to be publishing “ESG 101” blog posts over the next year that will dive into one element of an ESG program. The ESG 101 posts will take you past all the rhetoric, politics and panicked bias. We will do a deeper dive into the details of setting up an element of an effective ESG program in each post. I will start with anonymous ESG reporting.
Anonymous ESG Reporting Is More Than Just a Hotline
Smaller companies that can’t afford to set up an internal hotline or a hotline service will set up an anonymous drop box or have some way for people to anonymously post a concern on a website. Do check on hotline services because they may be a lot cheaper than you think. There are other ways to get this done inexpensively. If I could afford it and was a big enough company, I would do it all and more (covered below) to be better than most at finding ESG problems and getting ideas for making ESG improvements in my company.
Some call them helplines to take the negativity or stigma out of the word hotline. Most mid-sized to large companies outsource the hotline to get services such as 24/7/365 live human answering and multi-language answering services. You could have the hotline answered by the ESG Officer or someone in their department. I answered our compliance hotline when I was a compliance officer. One day I answered the hotline and someone said they wanted a table for 4. Some will not set up and ESG hotline because they have a hotline for other issues such as compliance. I think if you want to be better than most, you have to have a separate ESG Hotline to help people understand you want these kinds of calls and that ESG is important.
Another way to uncovers ESG issues
The number one way to find ESG issues is just wandering the halls occasionally and asking people if they know of any ESG problems or know of any ESG improvements that could be made. Some of these conversations are going to be frustrating because some people will ask for unreasonable change or just go off on an unrelated unhelpful rant. Get over it, there will be so many good ideas it will be well worth it. And every once in a while, you will find out about a significant ESG infraction that, thank goodness, you could get to before the Department of Justice or the internet gets to it.
Do not wait for people who know where the problems are to call the hotline, the majority would never “rat” anyone out… their words not mine. Good people will often not call a hotline. However, if you look them in the eye and ask if they know of an ESG related problem, most people wont lie. Some will be glad you asked because they can then say, “What was I to do, I had to mention the problem, I am not going to lie and say I don’t know of any problem.”
The absolute best time to ask is right after an ESG training session. Go back to the department that the training occurred in a day after the training. Wander around looking for casual conversations in the hallway. Try to do this when others can’t hear what is being said but don’t let a crowd stop you from asking for ESG improvement ideas. Talk about the weather (or whatever) and then ask what they thought of the training. Ask if they have any questions. Then ask if there was anything the speaker(s) said should not be happening… that is happening. This is a great time to get them when its fresh on their mind and maybe thinking, “They come in here and tell us this stuff is important and down the hall something is happening that is wrong.” Never forget, they might not know of any wrongdoing but they may think of something that would be a cheap or even cost neutral change that will result in an environmental, social or governance improvement. And that improvement will make your company and (maybe if we’re lucky) the world, a better place.