In January and February 2021, Bennett Jones hosted a three-part webinar series focusing on why ESG matters and how business leaders can drive ESG within their organization. This paper takes those conversations one-step further by providing a practical and high-level overview of the legal, operational and reputational tenets of an effective ESG strategy. Within it, you will find three major sections:
- ESG: Why It Matters to Your Business
- The Legal Framework for ESG-Based Decision-Making
- Integrating ESG into Your Business
The term Environmental, Social and Governance, or ESG, refers to a broad set of issues or criteria relating to corporate behaviour and performance that generally fall outside of the traditional financial performance indicators. ESG issues might include, for example, how a company responds to climate change, how it supports equity, diversity and inclusion within its workforce, and how its board and management structures and corporate policies support ethical, accountable and transparent practices.
Factoring ESG considerations into corporate decision-making is not new. There has been a shift over many years away from a shareholder-centric form of corporate governance, where decision-making focuses on short-term value and immediate profits, to a more holistic approach that considers multiple factors and interests as part of the overall sustainability and best interests of the business. This shift is occurring in public policy, legislation, and the general environment in which organizations operate.
When it comes to implementing ESG factors within an organization, it is not a one-size-fits-all approach. Rather, ESG platforms must be customized to address each company’s unique circumstances—including the type of business, the sector, the geographic location of operations, supply chains, and importantly, the nature of the ESG issues that are of importance to the organization’s communities and stakeholders. ESG provides a means by which organizations can identify these priority issues for their business, and implement systems to take an active, rather than passive, approach to managing them. In doing so, ESG values and considerations can be embedded within an organization in order to integrate these values and considerations into the core business strategy.