What is ESG and Why Does It Matter? A Note from Our COO:
When I look over the definition of ESG (Environmental, Social and Governance), it really strikes me as more of a mirror in the face of any company that is concerned with true sustainability.
Sustainability, regardless of market conditions, commodity swings, and trends etc., is perhaps not a true priority outside of the board room. In fact, I would suspect that many blue-collar workers barely know the true meaning of the word and how important it really should be to us all.
So, let’s break down what ESG is and why it matters:
“E” Environmental: What impacts to the environment does any given industry have? There are as many answers as there are industries but what is truly important? Environmental issues like waste, pollution, etc. all come with a cost that must be paid sooner or later. There is no way to shroud profit from these impacts. Only to pay for them on an ongoing basis or pay for them later in balance sheet adjustments, reductions, you name it.
“S” Social: Why are social issues important? Well, in today’s volatile fast-paced media world, one little slip of the tongue can send a vibrant brand into a tailspin. It may cause irreversible damage to even the largest, seemingly bulletproof companies. Unfortunately, this usually impacts people more so at the bottom of the ladder. These are the people who rely on companies for their own family’s well-being, and it is, for the most part, out of their control. Pretty risky if you ask me.
“G” Governance: Lots to talk about here but I think for brevity’s sake, I’ll just stick to integrity. It has always been my opinion that integrity is the main strut holding up the bottom line. What I mean is, that if integrity remains intact, many unfortunate circumstances can be avoided or at least survived.
“It’s no one’s fault if there’s no one to blame” is one of my simple philosophies. Sometimes things break without intent. It’s a fact of life that machines eventually wear out. No one’s fault really, that’s just how it is. But if a machine breaks because someone intentionally lets it or forces it to for a personal motive, then perhaps there is an integrity issue.
And, when machines break, it costs money to fix. That money comes right out of the bottom line. So, it’s conceivable that integrity could have its own line item on the balance sheet. Just saying…
I respectfully suggest we look at ESG through a clear lens. We should genuinely consider it to be a mirror for reflecting on just how good a job we as executives are really doing. Perhaps then the acronym will take on a more profound meaning. We can do an even better job of managing our business for the benefit of those for whom we are responsible – both employees and customers alike.
At the Catawater Group of Companies, we are constantly re-evaluating our business philosophies, policies, and procedures. We strive to ensure that we remain in alignment with industry trends. And by doing so, we endeavor to stay ahead of the game. This, no doubt, includes ESG and whatever the next generation of change brings.
As always, thank you for your time. May your businesses be blessed with good fortune for all who rely in its success.
Steve
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