ESG blah... blah...blah!
In recent years, the term “ESG” has permeated boardrooms, corporate annual reports, and marketing campaigns like an infectious buzzword. What does it actually mean though? How has it evolved?
Environmental, Social, and Governance, or ESG, was once a lofty idea that was supported as a driver of change in the corporate sector. However, businesses more concerned with looks than results have hijacked, distorted, and dilute it. It’s high time we cut through the smoke and mirrors and demand substance from the world of ESG.
Let’s not delude ourselves: ESG is nothing more than a glamorised marketing ploy in its current form. Numerous businesses have blatantly taken advantage of it to give the appearance of accountability while maintaining their unwavering focus on profit. They talk about “transparency,” “diversity,” and “sustainability,” but they don’t really mean to change the way they act. We should expose it for what it is — corporate virtue signalling, which is all it is. What has to happen before ESG becomes more than just a meaningless acronym? It takes a drastic mental adjustment as well as a dedication to tangible, actual improvement. No more feel-good news releases or greenwashing. This serves as a wake-up call for corporations: ESG is about changing the world, not simply making your annual report appear nice. Real transparency is the most important requirement. Companies need to be transparent about their financial and social effects on the environment and society. No more hiding behind cryptic figures and technical terms. It needs to go beyond simple compliance and box-checking. In order to improve their governance procedures, increase diversity and inclusion, and lessen their carbon footprint, corporations must establish high, attainable goals. For these objectives to truly have an influence, significant expenditures in the tools and resources required must be made.
Organisational cultures must change in order to implement ESG. The existence of a diversity and inclusion committee or a sustainability officer is insufficient. From the boardroom to the manufacturing floor, ESG must be deeply embedded in the corporate culture. Every employee has a responsibility to actively participate in the company’s ESG initiatives and should be aware of them. Regulatory agencies also need to perform better. Governments ought to establish more stringent ESG reporting regulations, and they ought to be prepared to penalise companies which break their promises severely. The world over can borrow from the EU’s Corporate Sustainability Reporting Directive (CSRD). Starting from 2024, almost 50,000 companies are subject to mandatory sustainability reporting, including nonEU companies which have subsidiaries operating within the EU or are listed on EU regulated markets.
The European Sustainability Reporting Standards (ESRSs) are much more rigorous in scope and depth of disclosure requirements than the current Non-Financial Reporting Directive (NFRD). Affected companies will have to report on over hundreds of metrics and targets.
In addition to tracking performance on climate change, the circular economy and pollution, organisations should be transparent about how they tackle biodiversity loss, and reductions in resource and water use – where this is material, or part of mandatory items required by other EU legislation. Social challenges like the treatment of workers within their own organisation and across the value chain, are also part of the new CSRD. Also, disclosures related to business conduct policies including corruption and bribery prevention, supplier relationship management, lobbying activities and payment practices, fall under the G standard. You know what’s utterly mind-boggling in this whole corporate circus? It’s as if these big-shot companies need a regulatory babysitter to spell out ‘hundreds of metrics and targets’ before they even consider doing what’s right – for the sake of this generation, and the ones that follow. But here’s the kicker, folks: these generations they’re potentially screwing over? Well, they’re not just random strangers; they’re their own flesh and blood, their buddies, and their pals! Talk about corporate blindness. ESG is about having a long-lasting influence on the world we live in, not just token acts. It’s time for businesses to embrace ESG as a potent force for change rather than just another convenient jargon to boost their profits. It cannot remain a hollow acronym, bastardized by corporations seeking to greenwash their image. It’s time for real action, accountability, and commitment. We should no longer accept ESG as lip service; it’s time to demand ESG with substance. The world deserves nothing less.
*Mathumo is a seasoned communications and brand specialist driven by a deep commitment to fostering sustainable and ethical business practices. He writes in his personal capacity; the views do not represent any organisations he works with or works for.