Environmental, Social, and Corporate Governance, commonly referred to as ESG – encompasses three core pillars that investors, clients, and employees use to evaluate a company’s worth. Upholding these pillars is essential to a company’s growth, and organizations that explicitly state their strategies to reduce their waste and pollution contributions and create a diverse and inclusive workforce at all levels of the company are more likely to succeed.
The ESG movement has come a long way since it entered the public lexicon in the 1990s, but there is still work to be done to ensure sustainable practices become universal. Adopting ESG principles is a journey that requires commitment and dedication from everyone in the company. ESG must be part of your corporate culture to come to life in everyday operations.
Effective execution of ESG initiatives requires a balanced focus on the three pillars. Much of the emphasis towards implementing ESG has been placed on “E” – the environmental component. While it is undoubtedly important to ensure that businesses are taking steps toward protecting the environment, an effective ESG strategy requires a holistic approach to achieve its full potential. The “S” and “G” (social and governance) must be considered just as integral for the initiative’s success.
Our Renewable Energy and Clean Technology practice has worked with many clients who have effectively used ESG principles to reach the pinnacle of their industries. TRANSEARCH is proud to work with GEVO, the leading producer of energy-dense liquid hydrocarbons and renewable chemicals with net-zero greenhouse gas emissions. GEVO supports and follows The United Nations Guiding Principles on Business and Human Rights and THE OECD Guidelines for Multinational Enterprises, among others. Its webpage states:
“At Gevo, we’re focused on sustainability in every facet of our business, from suppliers and the energy used in our processes to how our products impact the market.”
GEVO has signed deals with Delta, American, and Japan Airlines, along with other carriers, to supply millions of gallons per year of sustainable aviation fuel (SAF).
Companies are expected to uphold their social responsibilities as society becomes more inclusive. Anti-discrimination practices, pay equity laws, and other inclusive practices are paving the way for the “S” to garner more attention. According to McKinsey, there have certainly been “modest gains in representation over the last eight years; Women—especially women of color—are still dramatically underrepresented in corporate America. And this is particularly true in senior leadership: only one in four C-suite leaders is a woman, and only one in 20 is a woman of color.”
Another client, Hannon Armstrong, is the first U.S. public company solely dedicated to investments in climate solutions, providing capital to assets developed by leading companies in energy efficiency, renewable energy, and other sustainable infrastructure markets. Fast Company named Hannon Armstrong one of the World’s Most Innovative Companies of 2022. And they are a leader in offering premier work-life benefits to their employees, including four months of paid parental leave and unlimited personal time off (PTO).
Not only do we work with trailblazers, but we also practice what we preach! Each project we deliver to our clients is viewed through the lens of DEI, starting with research. Our research team is skilled in investigative techniques, and I (as a senior recruiter) pursued a certification in Diversity Sourcing (CDSP) to ensure that for every search we engage in, we include candidates from diverse backgrounds.
We have women in leadership roles throughout the organization. We have a female CEO heading our international organization and our U.S. office. On my team, 70% of our employees are women.
ESG encourages companies to focus on good corporate governance by adhering to ethical standards and practices when deciding how the company will operate. Many traditional business practices discount this aspect of ESG because of the inherent corruption and evasion tactics that represent the conventional way of “doing business;”. We realize now that it’s not just about getting things done; it’s how they get accomplished that matters. That’s what ESG is all about. And investing in companies focusing on ESG can be highly profitable. A report by Reuters and recent studies of several investment funds, including Morgan Stanley, Vanguard, and Fidelity, concluded that investing in ESG companies shows similar, if not slightly more, profitable results.
There are a few ways that ESG can be positively implemented in your business. Companies can begin by reviewing their ESG policies and strategies, ensuring they are up to date with the latest trends and approaches. It is also important to audit any current ESG initiatives, making sure goals and objectives are being met. Additionally, businesses should strive to make ESG part of their day-to-day operations – from hiring practices to marketing initiatives. Having ESG at the forefront of your corporate decision-making helps ensure everyone is on board for a sustainable future.
No matter how big or small your company may be, ESG principles should be adopted as soon as possible. Not only can this drive positive change within your organization, but it can also create a positive brand image with customers, investors, and stakeholders.