ESG and your business practices

Sustainability has been a well-known concept in the public consciousness for decades. The 1987 Brundtland report, "Our Common Future," sponsored by the United Nations, captures it well. The report defined sustainable development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." In other words, doing for you and yours is fine as long as it isn't the undoing of your offspring.

The term "environmental, social, and governance" (ESG) was introduced to the world in the 2005 UN study, "Who Cares Wins." According to the Green Business Bureau, ESG grew from the concept of business sustainability. In business, sustainability can be defined as "doing good." People increasingly seek it in the companies they do business with or invest in. According to the Corporate Governance Institute, environmental, social, and governance "are becoming the core pillars of corporate activity."

. . . to succeed,
consider embracing
the principles of ESG

For your business, this means that to succeed, you should consider adopting the principles of ESG. Do not harm the planet, the people, or your company's governance while running your business. Be attentive to three principles:

  1. Environmentally speaking, determine how well you treat the planet regarding climate change, carbon emissions, pollution, waste management and other issues.
  2. Socially speaking, ensure your business meets high standards on human rights, diversity, and labor systems; your involvement in the community is positive, and your attention to customer satisfaction is factored in.
  3. Speaking of governance, consider your business's management and decision-making procedures regarding your board's makeup, salaries, rights of shareholders, and transparency.

Profitability remains a top priority in ESG. But how you make your profit is critical in the minds of sustainability-conscious investors, stakeholders, employees and customers. So how do others know you are operating sustainably? They often turn to your company's annual report for data on its performance when considering ESG.

Avoiding greenwashing

Be aware that greenwashing has become a concern among many who want the companies they do business with to adhere to basic sustainable practices. Greenwashing occurs when company reports portraying a concern with sustainability don't reflect reality. To avoid greenwashing, ensure that these reports:

  • Share honest and thorough data on how well you are meeting ESG standards.
  • Provide environmental data on such factors as energy use, carbon emitted, waste management, and concern with and your use of local utilities.
  • Give essential social information on how you provide for employees' welfare and satisfaction, what you do for your community, and how well you adhere to human rights standards and labor practices.
  • Provide details on governance, or how well you manage your business regarding your board's makeup and code of conduct; how you fight corruption and fraud; how you oversee any conflicts of interest; and whether or not you've accrued any governmental warnings or fines.

Goal setting and ESG

Should you decide to adhere to ESG principles, you can begin by setting goals. First, define your goals in your vision and mission statements. Consider your strategies to meet ESG principles and your company's bottom line. Next, be aware of the 17 sustainable development goals (SDGs) created by the United Nations. These goals can help guide you as you determine your business's ESG goals.

Adhering to the UN Global Compact

Another UN initiative, the UN Global Compact, can help you as you work to implement ESG into your business practices. This compact outlines ten principles for you to follow around human rights, labor, environment, and anti-corruption. To uphold these principles, you and your business partners should ensure that:

  1. You protect and defend internationally established human rights.
  2. No aspect of your business, from your partners along your supply chain to your own practices, ignores human rights abuses.
  3. Your business recognizes and supports labor union practices such as employee rights to collective bargaining.
  4. You do not engage in forced labor.
  5. No minors are subjected to child labor.
  6. No discrimination occurs regarding employment practices.
  7. You take a stand against environmental problems.
  8. Your strategy includes environmental responsibility.
  9. You support technologies friendly to the environment.
  10. You stand against all types of corruption, including bribery and extortion.

Help is available to make sure you are upholding the ten principles. You can join the UN Global Compact, regardless of the size of your company. For more information, visit the UN Global Compact's Application Process page.


You owe your stakeholders the prospect of making a profit while still fulfilling ESG principles. After all, don't you want to ensure that people everywhere can meet their daily needs abundantly? And don't we all owe future generations the same ability to meet their needs abundantly?vvv

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