Gráinne Madden, the principal and CSR/ESG specialist at GJM Associates, outlines precisely how directors should approach environmental, social, and governance (ESG) in this valuable member’s session entitled ‘ESG essentials for directors’.
Gráinne Madden is a consultant, trainer and adviser in corporate responsibility and business ethics. She is also a lecturer to MBA students in corporate responsibility.
In this insightful member’s session, Gráinne shows why boards need to adopt strategic ESG practices.
Unfortunately, directors tasked with securing their company’s future often hold the enterprise back with an outdated emphasis on short-term value maximisation.
Research points to the need for a new management paradigm for corporate leaders – one in which ESG considerations are embedded in both strategy and operations.
Boards must create accountability structures for ESG integration, identify a corporate purpose, and build a culture around ESG. They should also make operational changes to support the execution of ESG strategy and commit to transparency and relationship building with investors.
ESG essentials for boards are likely to become financially material when:
- It becomes easier for stakeholders to gain insight into a firm’s social or environmental impacts
- When media and NGOs have more power and politicians are responsive to ESG concerns
- When companies cannot self-regulate
- When a company develops a differentiated product or service that replaces a dirty or unsustainable way of doing business
- ESG is not fuzzy or friendly; it is about long term viability
- ESG gives you strategic differentiation
- ESG gives you access to capital
- Boards must focus on the material issues
- Directors must ensure year-on-year, quarter-by-quarter comparability of metrics
- ESG is quantitative and qualitative
- Businesses should never greenwash