An interview with our ESG Senior Advisor, Daphne Biliouri-Grant
Q: There are three core pillars comprising ESG, but is there one key pillar that is more important and/or easier to include in your corporate strategy, especially if you are just starting your ESG journey?
When we are discussing the three pillars of ESG, it is important to note that they are of equal importance and they do not exist in silos. They are all interlinked and that is why it is essential to have a holistic approach towards the integration of ESG considerations within an organisation.
ESG integration is a daunting task for any organisation regardless of its size and often senior executives, boards, team leaders feel overwhelmed by the enormity of the task. This is driven by the fact that each pillar of ESG comprises of several issues, so there is the concern that it is not feasible for every single one of them to be addressed.
However, it is crucial to ensure that equal weight is given to all issues within each of the three pillars of E, S and G, as they are all of equal value. It is important for each organisation to look into successfully integrating ESG considerations from its own positioning within the industry in which it operates and the wider geopolitical environment. As each organisation has a different set of objectives and requirements, it should choose to work on the specific ESG issues that relate to its own mission, vision and value set. It needs to identify the issues that are relevant to its strategy because these will be the ones that it can also have the most significant impact.
And as a result, these issues should become the core of its ESG strategy. My advice has always been that you need to be aware of the bigger picture, but be focused on what you want to achieve so you can have a positive impact.
As mentioned earlier, it is important to remember that the issues that fall under these 3 pillars are inter-connected. For example, currently the climate crisis is at the forefront of the political agenda, the media and the business community. It has dominated the ESG agenda and it will continue to do so. As discussions at all levels continue to take place around decarbonisation, net zero targets, and electrification, all these provide great prospects for addressing the climate crisis. But while these solutions are emerging from an environmental perspective, we cannot lose sight of the fact that all the environmental issues that we are seeking to address are linked to social inequality. Therefore, any solution - in order to be effective - should be taking this unquestionable link between environmental and social issues into consideration.
I think a good example demonstrating this interconnectivity is the issue of supply chain management. In my opinion, it will gain a lot of attention over the next few years and dominate the ESG agenda, as it simultaneously deals with several ESG issues from all three pillars, such as pressure on natural resources, pollution, sustainable transport, labour issues, human rights, corruption, transparency and accountability.
Q: When it comes to ESG integration, how can companies integrate these into their existing corporate strategy, or are they better off starting again with a new strategy with ESG at its core?
When we talk about ESG integration it is very much about incorporating ESG perspectives within the current business strategy of an organisation. I think it will be really problematic trying to change the whole strategy. It is about adapting and refining your current strategy to embed policies, objectives, processes that are ESG -driven throughout your strategic plan. There are two points I would like to make here. First of all, the strategy of any organisation is a living document, one that has and needs to be revisited regularly, adapted to the changing environment and is flexible enough to allow for transformational change.
The pandemic crisis is a great example of how it forced everyone to adapt to a new reality and within the business community it became evident very quickly that the companies that were agile, flexible and quick to respond to the sudden changes were the ones that thrived and have been doing extremely well. So the same process applies when it comes to integrating ESG principles in your strategy. The companies that are able to review their strategy and embed ESG considerations swiftly and effectively, are the ones that will progress with its implementation on a faster pace.
And secondly, it’s important to remember that every organisation is at a different place on its ESG journey and some haven’t even started yet. Therefore, that will also define how successful and how speedy ESG integration on a strategic level can be. For the ones that have already developed quite a sophisticated approach to ESG integration, they have been discussing it internally for a long time, changes at a strategic level will already be happening. But for the ones who just started contemplating the importance of ESG considerations and are just about to embark on their ESG journey, changes on a strategic level are fundamental and can really accelerate their progress.
Q: How can companies protect ESG policies being implemented successfully when there is a change of leadership?
First of all it’s essential to clarify that no organisation is a static, impersonal entity. Organisations are led and run by people and therefore the essence of an organisation, its strategy, its purpose is defined by its leadership. Therefore, if the leadership has already incorporated a robust ESG-driven strategy that should be protected and remain intact because ESG considerations have become the core of the organisation, they are reflected in its corporate purpose and instilled throughout its strategic aims and structure.
We also have to ask the question of why this change took place in the first place. The introduction of ESG considerations within the strategy of an organisation is driven by a leadership that is shifting from a profit-driven to a value-driven business model and has already identified integrity is the core value and the main driver of its strategy. By achieving this, the process of transforming your policies, operations and structure is to reflect this change. You are bringing your executives, your team leaders, your employees - the complete workforce - behind this idea that becomes engrained within every aspect of the organisation. So you would expect that if there is a change of leadership, there is a solid foundation that can withstand a leadership change.