Environmental, social, and governance (ESG) initiatives seem to be on the minds of nearly every organization. Today’s environmental and social challenges are immense. How can we aid in improving the lives of all individuals and our planet so the generations after us can thrive, all while creating growth in the economy for the present? We won’t answer these questions overnight, but it’s easier than imagined for organizations to dive in and start setting up ESG goals. To learn why and how to get involved in this growing movement, read on.
Where environmental, social, and governance meet
The three facets, E S and G, do not necessarily go hand in hand; however, initiating one often affects another. Ultimately, all three move organizations in the same direction – bringing about change for the greater good.
When broken down, environmental, social, and governance elements have very separate definitions, yet they still intertwine and bolster each other. The E and the S, environmental and social, target inclusion, conservation, diversity, sustainability, labor practices, carbon mitigation, etc., and serve as those larger goals that organizations aim to reach. The G, governance, is where these goals and initiatives get hashed out, planned, and budgeted for, and where the reporting, tracking, and monitoring are performed. If an organization has strong governance systems, its environmental and social priorities may be structured with a very distinct idea of what the objectives, strategy, and results will be.
Putting governance systems in order garners greater environmental and social benefits
When an organization wants to be environmentally sustainable and/or socially responsible, it may incur upfront costs that impact profitability. But with forward-looking strategies, such as a cost-benefit analysis, organizations can plan and budget, so the benefits outweigh the costs. The long-term payoffs can include improving diversity and current workplace labor practices by meeting ESG mandates or making a cost difference for the business.
Achieving stronger and more impactful environmental and social results means that governance is staying ahead of the pace of change, whether regulatory, risk-related, or business opportunities. Organizations need to keep their eye on what’s coming to be ahead of the curve.
For example, the UK’s Financial Conduct Authority (FCA) has recently proposed new transparency rules for organizations to incorporate diversity throughout the business as well as the board. They must also disclose whether they have reached certain diversity targets. Similarly, a recent regulation change in the US arrived when the Securities and Exchange Commission approved a proposal, the Board Diversity Rule, by Nasdaq requiring organizations to report on the diversity within their board. The purpose of the Board Diversity Rule is to promote greater diversity among the boards of directors of Nasdaq-listed companies and provide stakeholders with consistent board diversity disclosure.
Mitigating climate change risk is another area organizations are focusing on in business continuity plans. One method is having an alternative delivery strategy where work can easily be transferred from an area impacted by natural disasters to another site. This model of having smaller centers in more locations can benefit workers in rural communities by reducing migration from villages to cities and have a positive environment impact by lowering carbon emissions from vehicles with less commuting.
Governance systems that can stay current or ahead of these kinds of changes can better prepare and strategize for changes that could affect their organization in the future and make adjustments now rather than later, mitigating future roadblocks.
Why it’s easier than ever for organizations to find a business case for ESG
Most companies can easily present a business case for the vast majority of ESG initiatives. In addition to keeping pace with regulatory changes, organizations can also realize many benefits by carrying out environmental and social programs. Here are some examples of how different industries are making a difference:
Currently, with the “Great Resignation” and talent shortage, many organizations are turning to impact sourcing as a solution to provide an affordable, untapped talent pool. Impact sourcing can bring an organization qualified workers with skill sets aligned to match client needs, engaged employees providing lower attrition rates, and opportunities to fulfill corporate social responsibility and diversity objectives. At a bare minimum level, organizations need to begin designing talent strategies that incorporate diversity and pay equity into their workplace ecosystem if they want to attract and retain talent.
Another business case that is catching steam in the healthcare world is decentralized clinical trials (DCT)s, where data is collected from a patient through sensors or remote monitoring devices, eliminating the need to visit a medical site. A huge benefit from DCTs is the reduction of trial costs and timelines, attracting a more diverse patient population. DCTs are also easily accessible to patients who have mobility issues, and can reach a global audience, increasing inclusivity and diversity.
The tech industry also is doing its part to help by exploring ways to mitigate the impact software development is having on our carbon footprint. All major tech companies have made ambitious commitments to be carbon neutral or negative as the world attempts to confront the critical climate change dilemma and are competitively differentiating themselves through green computing strategies. This feat can be achieved through high-performance coding standards, self-adaptable solutions, and code reusability. Even blockchain protocols are joining the green IT bandwagon by exploring different mining models. Learn more on this topic in our recent green software development blog.
It’s never too late to get involved
Going forward, to start making a real impact, more organizations need to address challenges and set goals to better our societies and the environment. If we want to see change, now’s the time to dive in.
To learn more about ESG and how to get involved, watch our webinars, ESG in Services: What Sourcing Teams Must Know to Do More and Digital for Good: Shape Your Sustainability Journey.
For more information on how to implement ESG initiatives, reach out to [email protected].