Only a decade ago ESG was a term rarely used by organisations; today it is not only mainstream but a pre-requisite for success.
Certainly, there is no shortage of evidence of how far ESG has penetrated the corporate psyche. Last year's Glasgow COP summit saw global commitments to further reduce emissions, reinforcing the importance of the “E” in ESG. In Australia and globally, many companies are not only far ahead of government-mandated targets but are critical of the political timidity being shown by governments on this vital issue.
Most organisations have also been considering areas such as Modern Slavery and Diversity, Equity and Inclusion as part of the activities associated with the “S” in ESG. In this regard many Australian companies have made genuine progress in terms of gender diversity on the boards of ASX-listed companies. Now our focus needs to turn to the inclusion part of the equation.
In theory, diversity of people in an organisation should lead to a diversity of ideas. But what this fails to recognise is that diversity can create "niggles”, “factions”, "cliques” that can frustrate the very thinking this diversity is meant to encourage. As one of my favourite quotes says, "Diversity is about being invited to the dance, inclusion is being asked to dance". So, it requires a conscious effort across an organisation to encourage people to participate and to have others actively listen and genuinely engage in discussion and debate without it becoming personal. Easier said than done I hear you say.
If you feel you are the “outsider” in these discussions or have not been able to achieve cut-through with your ideas, you might benefit from speaking to someone about getting ideas on how to do this. If you are a manager of a team and observe that your team members are not on the same page you might benefit from strategies on how to re-engage them.
At Ombpoint, our business is centred on these suggestions to help a business be more inclusive, more productive, and to harness the value of team diversity. Although these discussions are had on an individual (and confidential) basis, the business benefits in the "S” by receiving and understanding of trends on what is happening at the coal face. Boards that just measure the number of disputes and grievances are missing the proactive response – understanding what is causing friction in the system and giving people the skills, confidence and support to resolve these issues before they escalate into formalised disputes where solutions can be elusive, time-consuming and costly.
Organisations such as the Australian Council of Superannuation Investors (ASCI) have recognised that a poor workplace culture can undermine corporate goals to the extent it can impact on shareholder value, explaining why a company’s ESG agenda is so critical to the investment decisions its members make. To quote ASCI, “corporate culture presents a set of unique (often intangible) risks and opportunities which can be challenging to identify, manage and measure.” Ombpoint can be part of a holistic solution that organisations can create to measure and identify where those risks are and how they can be proactively managed.
The ESG agenda for organisations is going to remain fundamental to how organisations operate within the global economy. It’s no longer a question of whether to have an ESG strategy. Rather, its ensuring that the strategy works. Although it will vary from organisation to organisation, all will need to address intangible but critical elements such as culture and inclusion. For CPOs, CEOs and even boards, incorporating more "S” in their ESG agendas operating model is a journey they must take.
Lindall West | Managing Director
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