State Street’s Center for Applied Research looks at how ESG investing can help improve not only risk-adjusted returns but our society as a whole. The results of an interesting survey was released last year. ESG (environmental, social and governance) factors are now part of the investment industry’s analysis of publicly traded companies. ESG activities are indicators of company commitment to sustainable value creation. In the survey is a list of challenges when seeking to integrate sustainability. One huge item was missing. Culture.
ESG language is often found in company Vision and Values Statements but ESG is not observed in strategy and operations. In the move from aspiration to strategy to action, different units must work together for the first time. Sharing information, language, assumptions and processes with people who haven’t “normally” worked together are all required. Bridging the differences often brings the multiple cultures of disciplines and departments into play. Engineers and Comptrollers, CSR and Operations, Accounting and Research are just some of the “unusual” pairings that an integrated ESG approach requires.
While the survey results are aimed at investment professionals, there is useful information for anyone interested in integrating ESG. Additionally, Flora Moon, Sustainability Practice Director for Expressworks and Sophie Theys of Bureau Veritas, published a peer reviewed paper with the Society of Petroleum Engineers “Performance Framework for Evolving Sustainability Strategies.” A presentation about this paper is available. We help our clients focus on the cultural aspects of change. Whether it is sustainability, technology, process or business change, we can help.
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