Event: Are you taking action on ESG?
On Wednesday 20th March, Emperor and SIFA Strategy hosted an insight-fuelled roundtable to discuss the growing forces of change and how best to place sustainability, purpose and culture at the heart of your business.
A new generation of stakeholders are finding their voice and influencing the narrative around the role of business in society and boardroom decision making. This, coupled with the growing presence of technology in our lives, means we are living in a highly transparent era where business can no longer afford to sit on the sidelines.
Top line conversation topics
Subjects discussed included, but were not limited to:
1. Investor interest: Investors are moving environmental, social and governance issues up the agenda and companies need to be able to effectively communicate how they are operating to create long-term sustainable value. Investors are expecting the Board to explain linkage between stakeholder engagement and corporate culture to their business model and strategy, and for a company to provide real examples of how it is considering its impact on wider society and the interest of its stakeholders.
2. Long-term vs short-term: It was widely agreed that there is a challenge in balancing the short-term necessity of financial performance with the long-term importance ESG factors play in a company’s long-term sustainable performance and, ultimately, investor returns.
3. Culture linked to performance: There is a compelling and growing swell of evidence demonstrating the link between a strong and managed culture and outperformance.
4. Reality and maturity: Communicating and measuring culture appears to be the biggest challenge. The gap is wide between leaders acknowledging culture as being important to business success, and then actually reporting or demonstrating it. The old adage that “people are our greatest asset” is far from true if this is how leaders are reporting to their stakeholders. SIFA Strategy emphasised that measuring and managing culture is addressable.
5. Benefits: It was generally agreed that the diversity of the board leads to diversity of thought and that this is of greater significance and impact than the sex of those concerned. More women are beginning to appear on boards but they are typically non-executive roles. More ethnic diversity is needed too.
6. Inside out vs inside in: Companies should be engaging on ESG issues to create genuine positive impact, rather than as a communications or marketing exercise. Equally, companies need to be telling investors how ESG impactstheir business and what they are doing about it, rather than investors deciding for them.
7. Seeing what’s coming: Emperor outlined how a blend of stakeholder engagement and social listening will show the issues that are coming before they present themselves.
8. What’s material: There was general agreement on ignoring the fads and focusing on those topics that provide risk.
9. The future: Fergus and Leighton closed the discussions by looking to the future. Fergus noted that investors expect within three years for ESG to be linked with pay. Leighton notes that after culture, the growing impetus will be on businesses to talk about a wide range of social and environmental issues – biodiversity, plastics and water scarcity arguably being the most pertinent. It was generally agreed that companies are not fully prepared, but those that are (or are on the journey to becoming so) are likely to fare best in the longer term.
If you would like to discuss any of these topics in further detail, get in touch with Leighton Barnish, Head of Stakeholder Engagement at [email protected].