Sustainability as Strategy: A Board Member's Call to Action on ESG Engagement in North America
As a non-executive director who advocates for more aggressive Environmental, Social, and Governance (ESG) actions, especially in North America, I am deeply concerned about the findings of the global survey conducted by Oxford University and Protiviti. It's disheartening to see that North American corporate leaders are less engaged with ESG than their global counterparts. This reluctance to embrace ESG strategies not only undermines our potential for sustainable growth but also risks our global competitiveness and reputation.
The survey's results, showing only a quarter of North American leaders view ESG strategy as extremely important by 2032, compared to much higher numbers in Europe and Asia-Pacific, are alarming. This gap in perception and action is not just a disparity in statistics but a reflection of a worrying trend that could have far-reaching consequences for our businesses and society.
The politicization of ESG in the United States, as highlighted by BlackRock’s CEO Larry Fink, is a significant barrier. However, this should not deter us from recognizing the intrinsic value of ESG principles. Decarbonization, governance, and social issues are not merely optional extras or political statements; they are essential elements of a sustainable and responsible business model. Our focus should not waver due to political discourse but rather be strengthened by the urgent need to address global challenges like climate change and social inequality.
The reluctance to commit to ESG objectives, as indicated by the lower expectations of North American leaders regarding GHG emissions reduction and environmental risk assessment, is shortsighted. This approach not only ignores the potential regulatory changes but also the evolving expectations of our stakeholders, including consumers and employees. Younger generations, in particular, are increasingly prioritizing environmental and social responsibility in their consumer choices and employment decisions. This shift in societal values cannot be ignored without risking the alienation of a significant portion of our future workforce and customer base.
We must consider the broader implications of these findings. While ESG may be viewed through a lens of risk and compliance in North America, there is a clear opportunity to reframe it as a driver of innovation, competitive advantage, and sustainable financial performance. By integrating ESG considerations into our core business strategies, we can not only meet regulatory demands and stakeholder expectations but also unlock new markets and opportunities for growth.
The ten questions posed by Jim DeLoach (@Protiviti) are a clarion call for us to reconsider our approach to ESG. We need to move beyond a 'check-the-box' mentality and integrate sustainability into the very fabric of our business operations. This involves a commitment to invest in GHG emission reductions, embrace stakeholder engagement, and integrate sustainability into risk management and strategic planning.
The board has a pivotal role in this transformation. We need to ensure that sustainability is not just a peripheral concern but a central element of our strategic discussions and decision-making processes. This might require organizational changes, including the establishment of dedicated committees or the re-education of board members, to ensure a cohesive and comprehensive approach to sustainability.
In conclusion, the findings of the Oxford survey should be a wake-up call for all of us in leadership positions in North America. It is imperative that we recognize the strategic value of ESG and take decisive action to integrate these principles into our business models. This is not just about compliance or risk management; it is about ensuring the long-term resilience, growth, and success of our companies in an increasingly complex and interconnected world. As leaders, we have the responsibility to drive this change and set an example for others to follow.