Why company culture is critical for ESG

 

Photo courtesy of Freepik, for illustration purposes only

 Company culture; is something that is not easy to change and manage. But it is common understanding that it determines the enabling success of a company towards achieving its goals and aspirations, including for Environmental, Social and Governance (ESG) agenda.

Human Resources (HR) has a huge role to play in ESG; not merely by providing data for annual Sustainability Reporting, or driving Sustainability-related programmes for the workforce. Even though that ultimately the ESG agenda would most likely come from the Chief Executive Officer or the Chief Sustainability Officer, HR has the potential to ‘make or break’ the whole ESG agenda of a company through culture change of the company to embrace ESG and its objectives.

The fact that we need to understand – building any culture within the organisation is not easy, especially ESG culture. To begin, culture building must begin with the organisation’s authentic identity. What it means by ‘authentic’ is that it must not be based on borrowed or aspired clichés. Therefore, each organisation’s approach on ESG should be unique and integrated in its own context of ambition, and its key internal and external stakeholders’ expectations.

Employees should also have the say in deciding how aspirational they want ESG outcomes to be and how strategy needs to be developed and executed to achieve them. Do they want to be ESG leaders, or followers? Do they want to go beyond regulatory requirements? Each employee functions would have various views and all should be taken as important as the direction being set at the top level. Hence, it is important for organisations to factor in material views and align with the overall short, medium and short term ambitions.

But organisations also need to be abreast of immaterial views that may mislead towards achieving the intended outcomes. Communications is key where effective communications on the oragnisation ambitions should be made accessible and sufficient, where the tone at the top should be set and committed. Various ways can be adopted and with multiple channels to cater to the needs of the stakeholders for engagement whether informally or formally.

To embed an ESG-centric culture, it is important that key behaviours are ingrained across the organisation. This revolves around the materialisation of adopting characteristics and mindsets of long-term focus, collaborative approach, accountability and resilience. This is due to the fact that ESG is constantly evolving and requires prompt adaptation for organisations. With these characteristics, organisations can ensure the transition to an ESG-centric culture is achievable and sustainable.

 

 

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