…ESG and Effective Corporate Leadership
The future remains uncertain for the people and businesses across the globe who will have to endure the impact of climate change and its related effects. Green innovation is being promoted by creating a well-funded innovation ecosystem that brings together academia, industry and government institutions to undertake commercial and policy-driven research to promote ESG integration into businesses.
However, it is said the future belongs to those who are creative, innovative and original; who at the same time have the ability to allow their creations to evolve beyond anything they could have imagined. It is critical to admit that the days of operating solely for profit are gone. While profit-seeking is obviously still important, many companies now must focus largely on developing a holistic ESG policy framework to keep sustainability imperatives in check.
It’s also incredibly important to acknowledge that all companies operate in a way which demonstrates Environmental, Social and Governance commitments and responsibility. Thus, although it is not a legal requirement for now, incorporating business sustainability practices is seen as a good corporate initiative that impacts positively on the business and its stakeholder interests. Social responsibility and ethical business practices are vital to business success and resilience.
Therefore, to say ‘we live in interesting times’ is an understatement. The geopolitical landscape alone has never looked more complex than now. By this, Boards of directors ought to think beyond short-term profit and shareholder needs if their companies and the planet is to survive the collective challenges we face, and go on to thrive in the future we hope for.
Obviously, it has never been more important and urgent for boards of directors to consider all the environmental, social and governance (ESG) risks and opportunities in play which connect all these complex geopolitical factors. But that remains true because in times of trouble people look for leadership and good governance, especially for the sustainability of businesses and protection of the planet. Hence, we need leaders that have the necessary capabilities and insights so they gain the foresight to ensure proper oversight of their companies to pursue the negative results of businesses on the planet.
Today, institutions are engaging and supporting clients with their emissions-reduction plans. This engagement must address nature loss for an inclusive assessment of a number of risks and opportunities for these plans. Admittedly, climate change, nature loss and business impacts are deeply interconnected. Temperature rises, changes in precipitation patterns and extreme weather events have a wide range of impacts on nature and the survival of businesses.
The decline of nature affects weather patterns and the resilience of ecosystems in the face of benefits to society. Despite these deep interconnections, climate change and nature have historically nature-related risks over and above climate-related financial risks – unintended consequences for nature when actions focus exclusively on climate mitigation and adaptation, compounding effects from interactions between climate change and nature loss, potential synergies and cost-efficiencies when addressing climate change and nature.
This means a careful consideration of human rights, the community, environment and society in which it operates is needed. This article speaks to the importance of effective corporate stewardship in addressing the responsibility of leadership for sustainable, ethical practices through ESG compliance architecture.
Are you a Steward of the future?
Countries around the world have adopted a set of 17 goals to end poverty, protect the planet and ensure prosperity – all as a part of a new sustainable development agenda. The UN SDGs consist of specific targets with incredible importance that companies operate in a way which demonstrates the social responsibility enshrined in the UN Sustainable Development Goals as critical measures of their stewardship toward sustainable business and planet. Stewardship entails a profound understanding and acceptance of the challenges that result from the organisation’s interdependence with the societal and ecological contexts in which it operates, and of what it takes to embrace the challenges to be a force for building a viable future.
Great Stewardship ensures a company operates in an ethical and sustainable way, and deals with its environmental and social impacts. Stewardship, in its highest form, means tapping into the greatest potential waiting to unfold, and letting that potential show us the way forward. Stewards of the future live in service of that ever-evolving potential and have no attachment to specific forms or outcomes. They dare ask: why should business leaders embrace stewardship in the current market wherein profit-seeking reigns supreme? A shift in approach represents fundamental change for the corporate world, and even the most advanced corporations consider themselves to be in the starting blocks of this transition.
Making real progress in this corporate stewardship journey is possible, but depends on expanded aspirations for corporate institutions and new assumptions about what “good business” should mean. Protecting and enhancing the earth and its people, rather than exploiting its resources for financial gain; acting to create a world with healthy employees, communities and natural systems, rather than engaging in sustainability initiatives as a way to achieve business success require good leadership with foresight.
Today, corporations play central roles in communities, nations and the world, and their unprecedented access to resources and power position them to become “stewards of the future of humanity and the earth” – and ethically obligated to act as such. Stewards do not only make responsible use of that which they hold in trust; they leave it in an enhanced condition for future generations. But to become responsible stewards, profound changes in the way business executives and their corporations act are necessary.
Corporate Steward Leadership
What we are becoming is never fully known to us ahead of time. As Stewards of the future, we live with constant opportunity to discover ourselves and our world in its becoming. Somewhere out there, beyond what we have known, a new world awaits that is beyond our wildest dreams. Stewards of the future intuit that world and live in service of its’ unfolding.
In view of this, corporate leaders work in a variety of capacities to provide strategies and goals for an organisation and oversee its performance manifestation. While a corporate leadership role can be challenging and demanding, it can also allow one to make an impact on an organisation. Corporate leaders are becoming more concerned about the challenges facing our planet and its inhabitants, and many are now convinced that they must fundamentally change how their companies operate in order to be sustainably effective.
Climate change, water shortages, decreasing biodiversity, unequal distribution of wealth and economic opportunity, social unrest and cyber-attacks are among the acknowledged threats to sustainability for businesses around the globe – through which attention has been drawn to corporate leadership awareness.
Taking leadership roles in solving the world’s problems, rather than assuming it is a role of governments and businesses need only comply with what they are legislated to do, is the way to go. Collaborating with other stakeholders and sectors to build a global system governed by different principles and a new sense of equity and justice, rather than wielding corporate power to steer a disproportionate share of wealth to capital, is considered great leader stewardship.
The leading thinking in sustainability research, however, provides practical guidance on how companies can resolve the paradoxical challenges they face, and how they can effectively think of profit and remain responsible, effective, ethical, sustainable and adaptable as well. This in the meanwhile enables leaders to explore what businesses are doing; what they can and should do to effectively respond to external challenges; and focuses on how they can create cultures, strategies and designs far beyond ‘business as usual’.
In fact, Stewards of the future are willing to let what they have created dissolve in service of the next evolution of potential… even when the form it is to take is not yet clear. Stewards of the future recognise the interconnectedness of all. They understand that nothing is fixed, that nothing is permanent. Everything is part of a flow from what was to what will be. And what will be is, in fact, a part of the flow to what comes after that. They understand that we live in a constant state of becoming, and they have a role to play in changing narratives for the better
The Need for Effective Corporate Leadership
Corporate leaders are important because they can help guide a business with specific goals and policies. With strong leadership, a business can efficiently improve its functioning and reach by using intelligent, carefully-considered policies which target its exact areas of need. Corporate leaders can help guide employees so they do their best work for the organisation. With strong guidance and support coming from a company’s top level, all workers can align their work behind the same set of proven policies and practices rather than working toward separate goals.
To be a Corporate Steward is to be on the path to Stewardship – redefining the purpose of companies to include broader social, environmental and ethical goals, and thus deliver expanded value to the communities and stakeholders being served. The corporate leadership level of organisations is where decisions as to the introduction of transparent reporting systems which enable the organisation to track and simultaneously achieve triple-bottom-line outcomes take place.
At best, these integrated reporting systems shine a light on social and ecological outcomes as well as financial performance. To have crafted strategies in which social and environmental concerns are integral components and drivers of business models, designed production, human resource practices, management processes to optimise positive and mitigate negative impacts on environments, communities and stakeholders can only be made possible by an effective, institutionalised, corporate leadership structure.
Hence, focusing on long-term sustainable effectiveness rather than short-term financial outcomes requires leadership that is forward-looking to create a viable future for all humanity. Nevertheless, despite pockets of progress, most companies are slipping further behind on many social, economic and environmental dimensions. While some forward-looking companies have spearheaded excellent social and environmental initiatives, it is clear that global sustainability cannot be achieved by one company at a time. All corporations must learn to think in terms of how the global social, economic, environmental system operate as a whole, and must head toward ESG compliance.
ESG framework and Leadership role
To succeed in championing the integration of ESG into our corporate business structure will not be easy, but tough decisions and choices have to be made by leadership. In many cases, corporate leadership involves making decisions that can massively change the structure of a business. To make the correct decisions, one ought to analyse all available resources and then proceed with confidence – knowing that you’re making the best possible choice to help the business.
While stressing the fact that everything rises and falls on leadership – especially in the current volatile, uncertain, complex and ambiguous world, Dr. Victor Abbey in the recently-held Discovery ESG Sustainability Summit, 2022 recommended that corporate leadership efforts should at all times be directed to achieving the enforcement of an environmental impact assessment strategy and plan in all organisational endeavours; establishing effective management of stakeholder relationships; and adoption and strict adherence to professional corporate governance standards across all levels of the corporate structure.
He emphasised the adoption of mentorship and succession planning as key leadership tools for equipping and handling complex, rapidly-changing environment issues so leaders can transform and implement reforms which lead to sustained productivity, performance and compliance.
That being said, we all need to rethink how we can we keep working to protect our environment. Companies must ask the questions: “How we can rethink our business models as a corporate entities? How can businesses relate to customers and employees better? What is the environmental impact of our decisions as a business? What are the social impact decisions that drive our business operations and performance?” Indeed, if we want to be a sustainable impact company for the long run, our governance systems will obviously point to that better future.
Frank is the CEO and Strategic Partner of AQUABEV Investment and Discovery Consulting Group. He is an Executive Director and the Lead Coach in Leadership Development and best Business Management practices for Discovery Leadership Masterclass.
Dr. Obuobi is the Lead Consultant on Cx. Leadership & SME, Country Chair-Ladies in Business
