By Peter Makwanya COMPANIES, organisations and industries have been trying to deliver their products and services while promoting transparency on climate change requirements. Businesses are making sustained efforts to develop environmental, social and governance (ESG) strategies aimed at delivering the desired targeted net-zero outcomes. As they strive to do so, through their various compliance mechanisms, indirectly or directly, the environmental component is met with resilience or sustainability challenges.
It is the desire of these business concerns, within the framework of ESG, to promote transparency and build trust, while using appropriate tools. This is done to enhance their capabilities and support their management of climate-related and wider sustainability risks, opportunities and impacts.
Across industries, geographies and company sizes, organisations have been allocating more resources towards improving on ESG. In order to promote transparency and accountability, more companies are now trying to publish ESG reports internally and to their wider publics and stakeholders.
The main aim and reason behind the ESG framework is providing the more detailed disclosure of the climate-related risks and greenhouse gas (GHG) emissions, that they are trying to deal with and save the environment. In this regard, the major part of ESG growth has been driven by its environmental component and responses to climate change.
It is in this component of the environmental disclosure that many businesses are found wanting. Some have been guilty of suppressing actual carbon emission levels realised while others claim to be environmentally friendly and compliant but at the same time being guilty of discharging row effluent and chemicals into the water bodies.
In short, many companies fail to walk the talk, they misinform about the amount of the carbon footprints they discharge into the environment and that is the main bone of contention. Even in their reports, most businesses are very articulate in the publication of their dividends and losses but are far from convincing when it comes to environmental disclosure. In this regard, it is the environment that is of prime concern hence it should be fore-grounded sufficiently and effectively. Businesses in the transport, agriculture, energy and building sectors, among others, have a duty to publicise their mitigations co-benefits in order to demonstrate their environmental sustainability, positive carbon footprints and reduction of their emission intensive community of practice.
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One wonders if the ESG really matter to companies or it is just for lip-service purposes or window dressing. The environmental component is supposed to sustainably address the impact on the physical environment, together with the company risks and those of its suppliers and partners from climate change impacts.
Focus should also be directed at greenhouse gas emission such as pollution, water and waste water management. These also include solid waste and hazardous materials management, including how best the circular economy can be harmonised and humanised in order to be viewed with sustainability lenses not scorn and resentment.
Biodiversity and ecosystem services rehabilitation are also integral parts of the ESG as companies usually do not want to take responsibility for their impact on biological diversity and the wide range of ecosystem impacts and interactions. These can only be successful through sustainable environmentally centred and human specific corporate sustainability reporting which take into account holistic and ecosystemic information disclosure, dissemination and management.
The social component of ESG is also critical in this regard as it is supposed to be sufficiently interactive, engaging and inclusive of all the social groups, components, fabric and institutions, whether highly formal or culturally relevant. On the social sector, ESG is supposed to focus on addressing social impact and associated risks from societal actions, employees, customers and the wider communities.
How the companies participate in community engagements, diversity and inclusion is key. This component also suffers some setbacks as many companies are in communities only to promote their brand, publicise their brand images, woodwink the communities and disappear forever without sufficiently giving back to the communities.
Corporate social responsibility (CSR) is fundamental, but companies always want to play cameo roles and leave communities on their own without cushioning them for the socio-economic challenges they encounter. It is in the communities where relations should be established and nurtured with stakeholders as they are central to the economic contributions of the companies’ dividends. Communities help businesses’ grow, prosper and spread, it is against this background that communities should be at the heart of the businesses’ corporate social responsibilities. Without communities, business can not realise profits or brand name publicity and image enhancement.
The businesses’ positive footprints should be seen in communities through building strong partnerships, social support and networking by building schools, buying furniture and stationery including sponsoring sporting and agricultural activities.
In terms of governance, ESG is supposed to address the overall quality of decision making, governance structures and frameworks, while distribution of the rights and responsibilities across different stakeholder groups is key.
Governance issues include but are not limited to business ethics, data security, capital allocations and supply chain management. Business ethics is central to the running of business entities. These include issues of utmost good faith and transparency driven by sanity pricing models guided by market values, not ripping off and extortions. Doctoring prices, putting expired products on sale and bribing customers with misleading adverts is what the principles of ESG are not all about.
This also includes governance structures and community engagements including providing incentives in the form of genuine sales and price reductions that are people centred, aimed at motivating communities as important stakeholders.
Policies with regard to external disclosures and advocacy are aimed at providing timely updates, networking and sensitising stakeholders in order for them to stay up to date, informed and guided.
ESG is critical as businesses and industry should be seen acting in a way that is fair, appropriate and deserving trust. By so doing, businesses will, in the long run help to create value addition and beneficiation. Any unsustainable practices and behaviours would destroy trust and value chains established hence that would not resonate well with the ESG mandate and framework. In this regard, ESG should do a lot to promote people centred value-chain lenses and deliver communities from unjust practices that can indirectly fuel climate injustices against the requirements of sustainable development.
- Peter Makwanya is a climate change communicator. He writes in his personal capacity and can be contacted on: petrovmoyt@gmail.com