Environment, Social and Governance (ESG) – Colouring shades of grey….

Over the last few years Actinium has been engaged in a number of areas which have given rise to the leadership of organisations seeking guidance and clarification with respect to ESG matters (Environment, Social and Governance).

Despite, or perhaps because of, the vast numbers of papers, consultants’ opinion, regulatory requirements and institutional codes the ESG world is one of a multitude of shades of grey. Or even worse, various shades of green that include ‘green washing.’  

Consequently, when working with organisational leaders we have sought to try and reduce the ESG complexity to some fundamental precepts in order to clarify the originating ‘choice set’ and upon which boards and directors can act.  In this respect the diagram shown below is a distillation of a number of years of our experiences.

Figure: Navigating ESG

The overarching principles are straightforward. The approach that an organisation takes towards ESG matters distils down to a choice by its leaders. In the first instance the choice is guided by the leaders’ personal character – their guiding philosophy and resulting morals and ethics.

These elements in turn shape and guide the vision purpose and values of the organisation, and consequently its behaviours. It is important to note that we refer to the enacted choices and displayed behaviours, not those that are simply espoused. There are many cases of organisations which say they do good things, but in reality, act in bad ways.

With the leader and organisation EG approach/orientation clarified a broader ‘organisational behaviour’ decision has to be made. Will it be behaviour designed to meet the minimum ESG criteria and standards and no more? Or will it be a ‘high road,’ exemplar approach seeking to maximise its ESG goals? Whichever route is taken the decision will inform the organisation’s mindset and focus, which in turn will determine how the decisional drivers will be interpreted.

With a decision reached from these fundamental precepts how they are achieved and confirmed comes down to a) the usual human and operational factor competence of the organisation and b) the maintenance of engagement with the ESG Focus chosen.