Michael Law, Founder & CEO Summit Strategy Group; Founding Partner IBEX Partners
The answer lies in your ESG ratings, which are perilous to ignore in today’s social landscape.
Across the globe more than 400,000 people have died from COVID-19 in a matter of months. Hundreds of thousands continue to take to the streets to protest police brutality and racial injustice. Both are significantly impacting the business community as all eyes are watching how companies respond to the shifting landscape.
Corporations have already stepped up to address the pandemic by donating funds, products and services, and reconfiguring manufacturing facilities to produce products they have little expertise making.
They’ve made commitments to address their corporate cultures, to be more inclusive, and to break down the barriers that have stubbornly slowed the advancement of those that aren’t white men. Businesses are donating to agencies that can help affect change. They are listening and responding.
This is vital. Those who don’t take meaningful action do so at their own peril.
I have been in the business of corporate communications for 30 years and during this time I’ve counseled many executives about philanthropy, corporate social responsibility (CSR) and sustainability. To be honest, CSR has frequently struggled for relevancy in business. Whenever a corporation was facing tough times, CSR budgets were the first to go.
Today, things are very different. How businesses respond to the pandemic and racial injustice is now a serious measure of how well a company is managed, the caliber of leadership at the helm and a litmus test for whether a company will flourish in the long term. Corporations must get this right, and that means getting serious about environmental, social and governance (ESG) criteria – which is increasingly the standard by which investors and others are gauging the future performance of businesses.
In the most simplified terms, ESG measures a corporation’s handling of environmental stewardship, how it manages its relationships and maximizes value for stakeholders, engages on societal issues and its overall corporate behavior.
At the moment, a large segment of the U.S. workforce is taking a critical look at their employers and considering the “S” of ESG. Is my company inclusive? Does it value diversity? Does my company’s leadership team include people of color, women or those who identify as LGBTQ?
Corporate leaders are, I hope, doing the same. I often fear that the say-do ratio in the American business landscape is out of balance. Too many companies say they are socially responsible when in fact the amount they do falls woefully short of what is right and good.
The truth is, companies that are not rising to the occasion right now will face a day of reckoning. History will not look kindly on them.
Doing right by ESG criteria is not easy. It requires honesty, humility, accountability and the perseverance to push forward even when the work gets tough. The three rules of mountaineering are a useful reflection in the pursuit of ESG success. They are:It's always farther than it looks. It's always taller than it looks. And it's always harder than it looks.
Taking the right path requires humility, vision and strength. But mitigating corporate risk, enjoying long-term business success and knowing you’re on the right side of history, well, that’s when you’ve reached the highest summit.