Companies are impacted by real-world realities; what’s good for the world at large is also good for business. With that approach in mind, ESG (Environmental Social Governance) considerations increasingly are driving decision-making at major corporations. Womble Bond Dickinson Director of Impact Strategies Mark Newberg explores the what, why and how of ESG in this short video.
ESG is an operational approach to evaluate risk and long-term financial performance using a mindful, impactful set of criteria. Large financial corporations, such as Blackrock, have adopted ESG as a core component of their decision-making processes.
For example, a global food corporation turns its waste stream into a revenue stream by converting food waste into fertilizer or animal feed (Environmental). Then, the company becomes Fair Trade Certified, which boosts productivity and reduces employee turnover (Social). Diverse boards of directors typically are more successful long-term. So the corporation broadens the diversity of its board, bringing in a wider range of experiences and perspectives (Governance).
Newberg recommends the following three basic steps for ESG implementation:
- Read and explore questions that investment intuitions are asking.
- Appoint a board member or senior staff member to explore ESG in depth.
- Initiate a consistent and replicable process for incorporating ESG into operations. Then repeat.
This is the fourth in a series of Womble Whiteboard videos. Stay tuned for future installments.