19th Mar 2023
3 Min Read

What does the 'G' in ESG stand for?

Tony Stewart
Tony Stewart
People & Change

While ESG might be the most overused acronym in business today, the impact of your initiatives on your workplace and employees isn’t always crystal clear. Our Head of Digital Tony Stewart wades through murky waters to bring clarity on how to get governance right.

Did you know 20 per cent of people have turned down a job because the company’s environmental, social and governance (ESG) commitments didn’t align with their own? Your people, customers and investors care – and inaction is no longer an option.

This is exactly why ESG has become a top priority. But what is ESG? What does it mean for you? How does governance come into it? And how can you get your people on board?

What is ESG?

Environmental, social and governance – or ESG – refers to a set of frameworks and policies that define how your business acts on certain issues. Your DE&I initiatives, your values, net zero commitments, and anti-corruption and bribery policy are all central to your ESG efforts.

But ESG doesn’t just dictate how you act on some of the most important issues in the workplace. As Tony says: “It’s about common understanding and behaving in responsible ways; finding things we can all agree on in order to achieve more, grow and build a sustainable and successful future.”

To your investors, your ESG efforts – and how you report on them – can indicate a healthy organisation with room for growth. To your customers, they can show you’re serious about making a positive impact. But to your people, ESG can be make or break.

Around 82 per cent of employees want to be able to link their own personal values and purpose with the organisation they work for. That means that, if you want to find and retain the best talent, then you need to show your people you’re serious about your ESG initiatives.

G is for Governance

Governance is the G of ESG. It refers to a set of policies and processes that help run an organisation. Governance is designed to bring about transparency, promote ethical practice, create a secure working environment and, when done correctly, it can help build a workplace in which your people can do their best work.

Governance can include:

  • Codes of conduct
  • Digital governance
  • Security
  • Compliance and training
  • Make up of the board.

But your people aren’t alone in wanting an ethical workplace and organisation; your customers and your investors do, too. Because 63 per cent of customers want to see more ethical practices from companies; and governance covers a large part of those practices.

What do your people really care about?

Your governance isn’t just confined to the board room or monthly reports and, just like your environmental and social efforts, it isn’t black and white.

“Think about governance in terms of hard and soft rules,” explains Tony. “Take cyber security. There are rules, regulations and structured reporting procedures around it – that’s hard. But office etiquette, how we speak about customers, or more nuanced behaviours, these would be soft.

“Sometimes governance can be those little things you don’t pick up on – those water cooler moments that reveal more than your induction ever did. It’s why the first few weeks of a new job are important; you’re looking for what is and what isn’t acceptable or, ‘how we do things around here’.”

It’s this soft side of governance that’s often less well defined, but just as valuable to your people.

Getting your governance right for your people

Every business has governance policies in place to guide their efforts, but having the policies is just one piece of an intricate puzzle. It’s easy to act on a defined policy, but what do you do about these undefined soft rules?

If you’ve ever struggled in this space, here are a few key tips to guide you ramp up your efforts and engage your people:

  1. Set it in stone – Some things in the workplace can be hard to pin down; a behaviour that’s unacceptable to one person may be fine to another. For example, is it ok to use a well-meaning expletive in a team meeting? Wherever possible, define and codify the things you want to see and the things you don’t.
  1. Flex, shift and change – Whether it’s from external or internal pressure, what is and isn’t acceptable in the workplace is changing. Both your soft and hard governance must be malleable. Even if a business has a core set of values, governance still has to flex with change.
  1. Lead by example – Sometimes in the workplace the best way to let your people know what is and what isn’t okay – or what you should or shouldn’t do – is to lead by example. All it takes is a senior leader to speak up or act, and there you have it: clear communication from the top.
  1. Conversation is key – Open and honest conversation is always the best way for people to share and take in the behaviours your organisation expects. For example, if you openly praise people for doing the right thing, then it affirms the appreciation culture you want to encourage.
  1. Create communities – Whether it’s an online community or employee resource group, communities are a great way to help your people connect. They promote conversation and accountability on what your people expect from each other, while letting your people create change from within your organisation. They’re great places to observe the desired cultures and governance of your people, to help you flex, shift and change.

Building a better workplace

Never underestimate the impact your governance has on the rest of your ESG efforts.

“Think of governance as the thread that ties your environmental and social efforts together,” says Tony. “If you set your recycling initiatives in stone, then it has an impact on your environmental policies. If you have a diversity and inclusion initiative, then it should be codified; it’s one big chain of events.”

Governance is about growth. It’s about futureproofing your business, but reporting your efforts to a board is just one side of the coin. Governance and ESG will help you build a better future and a better workplace. The only questions is: are you building the workplace your people want?

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