Corporate focus continues to be increasingly fragmented amid unprecedented geopolitical and economic instability. As companies scramble to address new threats, have ESG objectives often taken a long-term view and lost their place, or how can ESG initiatives be used to most effectively address these new threats? Do you have?
ESG covers a wide range of issues, from a company’s energy footprint to employment practices and anti-corruption policies. As companies become increasingly fragmented or siloed, especially in the areas of governance, ethics and compliance, ESG goals can be difficult to achieve.
Ropes & Gray’s Anti-Corruption and International Risks Global Co-Chair Amanda Raad discussed strategies for strengthening ESG strategies at a panel event at the 2nd Annual Summit on ESG hosted by the American Conference Institute. The panel included Lisa Boyd, Lyft’s Director of Social Her Impact. Maureen Mitchell (Independent Director, Webster Bank, Natixis Loomis Sayles Mutual Funds); Tricia Etzold (Partner, Resolution Economics).
It was interesting to find during the panel event that the audience identified gender and ethnic diversity of employees and board members as one of the most important ESG goals, followed closely by energy consumption and anti-corruption. Some of the other ESG targets, such as pollution, carbon footprint and conservation, appear to vary by industry and, as recognized by the panel, can be difficult to monitor by metrics.
The panel discussed how tracking these metrics can have a significant impact on stakeholders, such as shareholders and employees, and the growing interest in meeting regulatory expectations. discussed. In fact, recent years have seen a wave of regulatory enforcement action against companies engaging in greenwashing, the false marketing that their products are environmentally friendly or have a greater impact on the environment than they actually do. Recently, the FCA proposed a new package of measures to tackle greenwashing.
However, to meet regulatory expectations and maximize ESG program performance, it is critical that organizations identify their top priorities and drill down into business performance from a data perspective, said Amanda Raad. increase. In that area, she paints a clear picture for stakeholders. Key methods discussed by panelists include:
- Identify areas of focus that are important to stakeholders (shareholders, board members, employees, etc.).
- Translating ESG initiatives/commitments into business priorities (by linking clear, specific business objectives to ESG objectives).
- Track metrics over time.
Panelists agreed that an effective ESG strategy requires stakeholder buy-in. This is an ongoing process best reflected through the impact of ESG strategies on bottom line. Finding this alignment requires an organization to understand the values and goals that drive its agenda and define metrics to measure progress in meeting and tracking those goals.
As the energy crisis deepens in Europe, a second wind of realignment and renewal of ESG efforts among organizations and governments could save many cold winters.
Learn more about how Ropes & Gray helps organizations address the complex and rapidly evolving demands of environmental, social, governance, corporate social responsibility, and business and human rights compliance here. please.