Why The ‘G’ In ESG Is Just As Important

Companies have been focusing increasingly more on environmental, social, and governance (ESG) initiatives in recent years. That’s driven by the overall impact that these can have. Not only will they benefit your company and its employees, but the greater community.

The benefits of these can be seen almost anywhere. When people think of these, they normally envision those associated with the environmental and social impacts of this. The governance part may not get as much attention.

It can be just as vital to your company’s efforts, however. There are multiple reasons for this. Though it will take time to implement strategies focused on this, it’ll be more than worth the effort.

Why Governance Is Important

You might wonder why governance is important as part of your ESG efforts. In short, it’s because it affects almost every other part of your business. If management and other business leaders have a negative reputation or act in a way that doesn’t appeal to others, then there could be problems.

Employees will want to know how decisions are made, especially when these choices affect the employees. They need to feel as though the company has their best interests at heart and that they’re important to the business.

Failing to get them involved through your environmental, social, and governance efforts will be off-putting and could lead to them leaving.

Governance Is Key

Typically, only stakeholders in a business had any interest or involvement in its governance. They’ve also been the only ones to impact this. That’s best seen with board members and other C-suite executives.

There’s been something of an employee rebellion in this regard over the past few years. Employees increasingly come to expect to have a say in how the company is run.

That’s especially true with what they believe to be failings in governance. Several notable examples of this can be seen. The most obvious include:

●       A lack of diversity in the boardroom.

●       Executive compensation being quite high compared to standard employees.

●       Executives sitting on multiple boards.

●       Creating and enacting policies believed to be against the company’s ethics.

These can all be seen as significant negatives by employees and other third parties. That makes addressing them as part of your ESG efforts vital. While some initiatives to tackle these could be obvious, many others may not be.

What You Can Do

With the implications that a lack of effective governance can have, including regulatory and employee issues, you’ll want to focus on it.

You can improve your corporate governance in more than a few ways, some of which should be relatively obvious. Some of the more common and effective include:

●       Making sure that executive compensation is in line with company guidelines

●       Increasing diversity among board members and business leaders.

●       Enacting policies that reflect employee ethics.

Reshaping your company’s policies can play a significant role in this, although it won’t be easy. Using Amba’s human resource-focused products and services, however, you can simplify this.

Not only will involving employees in decision-making be easier, but you can quickly address your company’s structure, if needed. There’s no reason not to capitalise on this.

How to implement an ESG strategy

Implementing ESG practices and processes can be a daunting step. Our platform, Lumina, includes your choice of many ESG products and services, plus your flexible employee benefits platform, HR Information System, online payslips, and other work-related technology, so it’s all in one place. Good for people, good for the planet.

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