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As our globalized world becomes increasingly complex, the role of businesses in society is more important than ever before. In order to create sustainable and equitable communities, we need businesses that operate with Environmental and Social Governance (ESG) at their core. This means developing frameworks and learning roadmaps that place the governance of environmental and social dimensions at the heart of organizational strategy and corporate culture. Let’s explore how to achieve this goal, which will in turn help to grow more socially, financially and environmentally sustainable businesses.

First, what businesses should implement Environmental and Social Governance practices?

Organizations of all types and sizes are being forced into leadership introspection to better evaluate their impact. Whether they’re large international corporations or small, domestic players, and whether they’re willing or not, businesses are on a journey to rethink how they deliver value, to whom and according to which principles.

Whether tasked to address the impact of water scarcity, the provenance of goods through their supply chains, issues around human rights abuses or the sustenance of indigenous populations, leaders at all levels must learn to incorporate Environmental and Social Governance criteria in an intentional and systematic fashion as a means of delivering more sustainable business outcomes.

If this is starting to sound like you, then it's important to keep reading.

Second, who is responsible for the Environmental and Social Governance success of each business?

Well, the simple answer is... you. Whether as the lead decision maker or as a contributor to business initiatives that aim at reshaping your organization’s sustainability profile, remember to think about these three dimensions: Context, Impact and Value. In the post-COVID world, in which we face a much needed societal and economic recovery, these pillars are even more compelling. They are foundational dimensions that will help you to understand and succeed in delivering ESG success in your day to day.

Let's dig a bit deeper into these three pillars.

Organizations that redefine their sustainability journey starting from their individual ecosystem (their Context) and the mission they are willing to deliver (their Impact) are best positioned to learn from the insights that emerge from translating sustainability principles into actionable organizational goals and operational roadmaps. Those businesses are the ones that recognize and prioritize Environmental and Social Governance as a business responsibility and as a source of enterprise value (Value).

You won't be an expert in each dimension overnight but understanding your responsibility to developing a stronger company foundation based around ESG will help you in navigating the impact challenge.

Third, how can businesses develop the knowledge to grow their organizational strategy around an Environmental and Social Governance lens?

We need to think deeply about how we want to reshape organizations to learn about sustainability, in what terms and why.

The challenge posed by the massive amount of data emerging from early attempts to evaluate ESG practices is that most data sources and available evaluation systems remain outside an organization’s range of knowledge. Ironically, the first attempts at integrating ESG dimensions into the fabric of businesses are relegating these variables to external knowledge hubs, creating a multitude of data technicians instead of business strategists. This is not surprising, as companies are seeking to balance their existing operating context – what they know and already have access to – with a fast-evolving regulatory environment that seems to be creating more and more minimum requirements to comply with.

In other words, we need to put the power of knowledge back into the hands of businesses whose responsibility in growing a more socially, financially and environmentally sustainable world is paramount to our global society. Without experts and knowledge keepers in each organization, ESG goals are not sustainable. Businesses need to build a foundational awareness of ESG values from the bottom-up to ensure the principles of sustainability echo throughout their organizations and beyond.

One thing is certain as we continue to navigate this ever-changing world in the face of the COVID pandemic: We must learn together, not alone. My book, The Impact Challenge, both explores solutions to this question, and is itself a solution for businesses seeking to adopt the pillars of sustainability innovation into their business growth. It defines a toolkit that businesses may use to generate sustainable values, goals and initiatives. And it combines both theory and practice in a practical style by presenting real-life applications at a global and local level.

The growing field of Environmental and Social Governance is set to redefine the way businesses operate, grow and generate economic and societal value. By developing operating frameworks now with ESG at the core, you can lead the way in shaping the tools, policies, behaviors and organizational beliefs of businesses in our growing society.

If this article resonated with you, I urge you to read more about how it's possible to grow more socially, financially, and environmentally sustainable businesses in my book, available for purchase here. All author royalties benefit the Global Association of Research Methods and Data Science (GRMDS) and help grow the ecosystem of professionals that are tackling the world’s most challenging problems through next-gen computing. You can also stay up-to-date on my latest articles exploring The Impact Challenge and the growing field of Environmental and Social Governance.

About the Author

ALESSIA FALSARONE, SASB FSA, is a sustainable finance expert and a fellow of the Aspen Institute Business and Society Program. Her work bridges the gap between sustainability, financial innovation and risk management. A sought-after commentator for media outlets and contributor to academic programs, Ms. Falsarone is a member of high-level advisory groups that promote environmental and climate finance, including the G20 Environmental Ministerial, the London Stock Exchange, the Sustainability Accounting Standards Board (Value Reporting Foundation) and the UN Principles for Responsible Investment. In recognition of her innovative vision for business and society, she has received an Honoree Award from the Women’s Venture Fund and the 2021 Global Leadership Award by the SheInspires Foundation in the UK.

She is an alumna of Stanford University, the MIT Sloan School of Business and Bocconi University. Ms. Falsarone holds certified director status with the National Association of Corporate Directors. An avid advocate of sustainability in business education, she has contributed to educational initiatives on the topic at the Asian University for Women, the Society of Corporate Compliance, the Swiss Sustainable Finance Initiative, the United Nations, the World Bank, Stanford University and University of Chicago, including delivering training on climate risk and green finance in Asia Pacific and Latin America.

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