top of page
Men in Suits
  • Directors' Institute

ESG Values Changing the Company’s Culture – A Transformation from inside for the outside

Environmental, social, and governance (ESG) issues are becoming more important as the world struggles with climate change, social injustices, and governance challenges. They are now essential for sustainable prosperity. While there is ample evidence that companies are reacting to the increased interest in ESG initiatives, they often forget to consider a significant element - ‘culture’ while developing their ESG strategies.

This brings another discussion point into the limelight, “How is a company’s culture relevant to ESG and why is it important for companies to get it right?”

Companies risk losing the confidence of their employees, clients, and the general public if they do not prioritize the integration of culture while developing ESG strategies. These strategies can no more be limited to diversity commitments, eco-friendly packaging, or aiming for net-zero emissions. Consumers and employees expect companies to have a greater role in the company’s culture in advancing the resolution of ESG issues.

ESG used to be about compliance and risk reduction, but today, it is a must for achieving uncommon growth. The increased awareness related to ESG Certification in India has been a game-changer for leaders in influencing their corporate culture. And the businesses that have actively implemented ESG initiatives are those that have successfully influenced the culture of their entire ecosystem of stakeholders.



Establishing a link between ESG and an organization’s culture


According to a recent PwC survey, 91% of business leaders strongly believe that acting on ESG issues is one of the top responsibilities of their organization. ESG is confirmed to be a crucial, ongoing part of the business when it is integrated at the strategic level. Business leaders can show their commitment towards ESG by giving it a high priority.


Leaders must communicate a clear vision that explains why ESG is everyone's concern. ESG is now much more than a check-the-box exercise. The companies must hire an ESG-certified individual to help integrate ESG with the company’s strategies, initiatives, and KPIs (i.e., people, plans, actions, culture, etc.). This can be achieved by paying attention to the perspectives and suggestions of all stakeholders. Regarding the company’s culture, ESG is all about incorporating multiple viewpoints.


Further, having ESG goals is great, but businesses should also take measures to really achieve them by integrating ESG features into measurable outcomes. To achieve defined goals, ESG should be embraced as a crucial component of planning, people, culture, and purpose.


Fostering collaboration and connecting people through ESG


ESG reporting needs more than compliance auditors. The ESG reporting team should also have ESG experts, contributors, and certified independent directors that can connect with every employee in the company, forming a hub. To achieve a minimal standard of governance and protect minority rights, the demand for independent directors has also been increasing.


The value chain importance of an ESG team within an organization is equivalent to allocating a central office. Building ties with outside advisors, consumers, and the government should be a priority for the ESG team. The team must work with other departments and provide important and respected input at meetings by putting a solid mechanism in place within the business. Instead of just gathering and using data, their roles should focus on following international news and offering fresh approaches to ESG maturity.


Integrating ESG into all operational processes


The demand for ESG affects the entire corporation, involving people and data from all departments. The issue with how ESG has traditionally been managed is that so much effort is spent gathering data and generating reports. With regulatory and employee changes on top of that, it takes a long time. Companies can use their resources in meaningful activities that contribute to progress with changes in rules and staff.

To optimize productivity, organizations can integrate and automate their ESG operations. This ensures uniformity at all levels, including procedures, systems, and people. Integrated ESG provides flexibility, improved capability, and performance benchmarking. It also aids in the conversion of knowledge into action.


Instituting transparency and trust as core values


Transparency in disclosing ESG strategies helps build and strengthen an organization’s relationship with investors, employees, consumers, and other stakeholders. According to a recent PwC survey, 76% of consumers are more inclined to call off relationships with organizations that are ignorant about the communities, employees, or the environment. Failing to implement a clear ESG reporting plan can expose companies to various risks, including compromising their reputation with stakeholders.


Promoting a culture of social justice


It is one thing for business executives to express concern over racial justice and equity issues, but quite another for them to act and inform the public of their efforts.

According to a survey conducted by Benevity, over 25% of U.S. workers think leadership has done little to nothing in the previous year to address racial injustice and equity, despite the fact that 80% of Americans feel businesses should do so. Almost 40% of workers said they would probably leave their current positions if their employer did not prioritize resolving social or racial inequality.


The companies’ leadership should reconsider their position if they do not believe that discussing racial and social concerns in the workplace is appropriate.


Final Thoughts


ESG does not need to be introduced or explained any longer. ESG is increasingly being incorporated into boardroom operations for corporations, investor gatherings, and regulatory statements. However, ESG has not yet become a standard component of internal corporate governance and individual employee operations. A course on corporate governance can significantly influence a leader’s ESG governance strategies. Organizations must effectively integrate ESG across corporate culture and not just the boardroom if they want to include ESG reporting in their corporate mission in a meaningful way.


ESG wants gravity more than just acknowledgment. Businesses are implementing a paradigm shift in their value culture by leveraging the relationship between culture, governance, and the ESG framework. The effectiveness of a company's ESG initiatives is clearly correlated with its culture and future financial performance. It promotes employee engagement, draws in fresh talent, and boosts productivity and compliance.


Way Forward


ESG is understood by all stakeholders if it is integrated into daily systems, procedures, and overall strategy. But the company’s key managerial personnel must have expertise and skills to understand ESG concepts and its integration process in company’s culture and values. Director’s Institute, India’s leading professional training platform provides comprehensive certification courses on ESG that are available online. This platform allows you to not only complete courses but interact with other fellow professionals in the community and learn from their experiences as well.


9 views0 comments
bottom of page