I’m sharing a handful of key points delivered to participants of the “Future Leaders” program of the Hungarian chapter of the World Business Council for Sustainable Development (BCSDH) on ESG and ethics.
- ESG & Stakeholder Capitalism: ESG is rooted in the notion of moral capitalism, a reformed system that aims to create value for all stakeholders as opposed to being solely focused on growth, profits and the interests of shareholders. Is this completely new? No. But current global challenges, amongst them climate change, force us to give it a real go and require us to transform the way we conduct business.
- Growing momentum: one third of all global assets (roughly 35 trillion dollars) are now reported to be managed in sustainability funds, with inflows growing rapidly. Funds and stock exchange indices are proliferating. The financial cunami sweeps markets, drives the widespread adoption of ESG. Welcome side effects: growing long term thinking and better risk management, opportunities for early adopters (capital and financing, new customers, loyal and motivated employees, lower costs and growing productivity).
- ESG & ethics: ESG measures morality in business. Creates a welcome double-standard (financial and non-financial). The framework facilitates matching the values of investors with values of the businesses they are investing in. As inclusion of stakeholders in business decision making takes place, exclusion and often divestment is increasingly happening in industries and companies not aligned with ESG values, especially heavy polluters and high emitters of GHG.
- ESG credibility: currently the Achilles heel of ESG is the lack of universal metrics. We are still comparing apples with oranges. This has to change. Greenwashing must give way to real performance measured and reported using similar standards.
- The biggest questions remain unanswered: do moral capitalism and within that ESG go far enough and fast enough to save our species and planet or we face an even bigger paradigm shift away from growth and consumerism? How ethical or radical we must be to achieve sustainability within the time we have left to act?
- Ethical and competent: according to the 2021 Edelman Trust business is regarded the only sphere both ethical and competent, doing better than NGOs, government or media. Let’s not squander that position by substituting real action with lip service to sustainability. Walk the ESG talk.
Photo credit: BCSDH.