Ethics teach us right from wrong, while culture helps us belong.
Ethics guide us to do what's fair, while culture shows us how to care.
Environmental, Social and Governance (ESG) reporting frameworks support sustainability management, ethical practices and conscious consumerism. Practically, they are used to disclose data covering business and organisational operations, opportunities and risks. It reveals the company’s behavior, and is increasingly used by socially conscious investors to evaluate potential investments. This incentivises companies, including its holding entities, to behave responsibly and refrain from engaging in risky or unethical practices.
Within the ESG framework, the social criteria examine how corporations and organisations manage relationships with employees, suppliers, customers, and the community. Across the globe, efforts are being made to implement the ESG strategies.
Going beyond rhetoric to action
In Singapore cross-sectoral efforts by National Volunteer & Philanthropy Centre (NVPC) as the steward of the City of Good mission and The Alliance for Action on Corporate Purpose (AfA-CP) has resulted in the co-design and co-development of the ‘National Framework & Blueprint on Corporate Purpose’, to address the triple bottom line of people, planet, and prosperity. The framework provides an overview of what corporate purpose is and why it is a vital consideration for businesses in today’s world.
While the purpose guides a company’s strategy and decision-making, articulating the corporate purpose statement in itself, is an important part of this effort,
It is important to note that a corporate purpose statement alone is not enough; A strategy is also required to enable the actions that bring the corporate purpose to life and put it into practice.
More details on ‘Corporate Purpose: A Framework and Blueprint for Businesses in Singapore
Focus on shifting to authenticity, ethics and collaboration
Driven by the fact that consumers, investors, employees, regulators, and the community are becoming ever more alert to greenwashing and exaggerated claims, the all-of-ecosystem approach to drive change is taking hold.
The Global Network of Civil Society Organisations for Disaster Reduction ( GNDR) is an example of this approach. It is the largest international network of civil society organisations working to strengthen resilience and reduce risk in communities, connecting frontline civil society organisations with national and international policymaking institutions and governments. It has three goals which are:
- Strengthen the collaboration, solidarity and mobilisation of civil society organisations
- Champion a localisation movement
- Strive for risk-informed development
Following the Nepal Earthquake in 2015, GNDR’s member SEEDS India (Sustainable Environment and Ecological Development Society) initiated the rebuilding of transitional shelters for 2,520 families in ten districts of Nepal in a span of one year. Building back better was not only a matter of housing, but also a matter of providing livelihood to the affected communities. This initiative created a strong multi-pronged partnership in keeping with GNDR’s all-of-ecosystem approach and localisation efforts, between SEEDS India, Chaudhary Foundation, Nepal and PricewaterhouseCoopers, India, to meet the ambitious target of providing sustainable and safe shelter for each of these families. The partnership was impactful, created efficiencies of cost and scale, and operated on the concept of “Interoperability” – wherein the expertise of each partner was leveraged.
Measurement and Environment, Social, Governance (ESG) disclosure
While convergence on global reporting standards is a work in progress, the ESG framework provides a set of criteria used to evaluate an organisation's environmental, social, and governance impact. Businesses and organisations benefit from robust ESG disclosure, which helps create stakeholder value and becomes a core ideology and culture in the organisation.
Here are a few ways in which ESG measurements can help stakeholder values:
- Aligning the company’s purpose and strategy with the interests and needs of various stakeholders, including customers, employees, communities, suppliers, and shareholders
- Enhancing the company’s reputation and brand value by addressing environmental and social issues that matter to its stakeholders
- Attracting and retaining talent, capital, and customers by demonstrating leadership and commitment to ESG performance
Some examples of ESG metrics that can be used to measure stakeholder value are:
Environmental: greenhouse gas emissions, energy consumption, water usage, waste generation, biodiversity impact, etc.
- Social: employee health and safety, diversity and inclusion, labour rights, customer satisfaction, community engagement, human rights, etc.
- Governance: board composition and independence, executive compensation, business ethics, anti-corruption practices, stakeholder engagement, etc.
ESG disclosure plays a crucial role in driving sustainable business practices by promoting transparency and accountability among stakeholders. This entails revealing validated and verifiable data about an organisation's ecological effects, social accountability initiatives, and management approaches.
Challenges faced by Civil Society Organisations (CSOs) when working with collaborators on the ESG journey
The impacts of planetary and man-made crises often fall disproportionately upon underserved communities who are the least able to prepare for or recover from such events. It is important to focus on risk-informed development and localised solutions, as well as long-term rather than project-based efforts.
Here are the possible solutions to solve such challenges:
- Using a strengths-based approach that focuses on the capacities and resources of the stakeholders, rather than the problems and deficiencies
- Engaging in interactive and respectful dialogue that seeks to understand the perspectives and experiences of different stakeholders, and to share resources, responsibilities, and rewards
- Setting clear and realistic goals that are based on the desired outcomes and the existing strengths of the stakeholders, and tracking progress and feedback
- Celebrating successes and learning from challenges, and acknowledging the contributions and efforts of all stakeholders
By connecting ESG reporting to ESG planning, decision-makers across all the various collaborators would have a clear understanding and articulation of the material issues to be collectively focused on, as well as what each collaborator is doing individually about these issues in terms of their strategy, measurement, and impact targets. An agreement on the reporting, that demonstrates focus and understanding of the issues and the deliverables of each of the collaborators is supported while ensuring that the ESG strategy is supported with sufficient budget to implement the required initiatives and plans.
Growing evidence that purpose and profit are directly co-related
A purpose-driven ideology delivers greater competitiveness and resilience to businesses. Trust-based philanthropy is gaining attention and the long-pending shift from the top-down model of international development assistance to the globalisation of philanthropy through members of the community.
This is evident based on the different reports shown here:
A study by Ernst & Young and Harvard Business Review Analytic Services found that 58% of companies with a clearly articulated and understood purpose experienced growth of 10% or more in the past three years
- Deloitte found that 73% of employees who say they work at a “purpose-driven” company are engaged, compared to just 23% of those who do not
- KPMG found that companies with a strong sense of purpose outperformed the S&P 500 index by ten10 times between 1996 and 2011
- A report by Accenture found that 63% of global consumers prefer to buy goods and services from companies that stand for a shared purpose that reflects their personal values and beliefs
- Unilever found that its purpose-led, sustainable living brands grew 69% faster than the rest of the business and delivered 75% of the company’s growth in 2018
- A survey by PwC found that 79% of business leaders believe that an organization’s purpose is central to business success, yet only 34% of them actually use purpose as a guidepost in decision-making processes within their organization
Well before discussions and studies on the correlation between purpose and profit became mainstream, Jamsetji Tata, the founder of the TATA Group of companies in India, placed the importance of the community before their own wealth creation. Profits were secondary to the founder Jamsetji Tata. This tradition has been followed by his successors. As the conglomerate pursued excellence in whatever it did, profits followed. Today the mission of the TATA Group continues to be: "To improve the quality of life of the communities we serve globally, through long-term stakeholder value creation based on leadership with trust."
Keeping with the times
I will be conducting workshops on the Leveraging ESG megatrends at the International Fundraising Congress #IFC2023 held in the Netherlands. Leaders from the social impact organisations will learn how to mobilise resources and expertise, to address challenges in a collaborative way that creates long-term sustainable growth conditions in the long run for the communities they serve.
The workshop is designed for change-makers who want to gain an edge in the fast-moving, still evolving, yet irreversible trend towards ESG in efforts to meet SDG goals. The learning objectives for the workshops are:
- Understand the ABCs of the journey from philanthropy to ESG, as the foundation for measurable, accountable, and sustainable impact
- Expand ESG knowledge and develop competencies to accomplish their resource mobilisation obligations
- Explore factors within each of the ESG areas and their relevance to fundraising
- Gain pragmatic insights to capture ESG-related opportunities and future-focused fundraising.
Special thanks to Tony Soh, CEO of Singapore’s National Volunteer and Philanthropy Centre (NVPC – Towards a City of Good) and Marcos Concepcion Raba, Executive Director, Global Network of Civil Society Organisations for Disaster Reduction (GNDR) for sharing their frameworks and experiences at the August Keynote organised for its global community by the Resource Alliance, that I had the pleasure of facilitating.
