ESG Matters: How to Save the Planet, Empower People, and Outperform the Competition
By David Brown
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About this ebook
We only have one planet.
Individually and corporately, we are all stewards of the natural environment, but we have not protected, nurtured, or renewed it as well as we should have.
In ESG Matters, authors Dr. Debra L. Brown and David A. H. Brown challenge the thinking that businesse
David Brown
David Brown is the host of the hit podcasts Business Wars and Business Wars Daily. He is also the co-creator and host of Texas Standard, the Lone Star’s statewide daily news show, and was the former anchor of the Peabody award-winning public radio business program Marketplace. He has been a public radio journalist for more than three decades, winning multiple awards, and is a contributor to All Things Considered, Morning Edition, and other NPR programs. Brown earned his PhD in Journalism from the University of Texas at Austin and his Juris Doctor from Washington and Lee University School of Law. He lives with his wife and two children in Austin, Texas.
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ESG Matters - David Brown
ESG Matters:
How to Save the Planet, Empower People, and Outperform the Competition
Dr. Debra L. Brown
and
David A. H. Brown
Icon Description automatically generatedESG Matters © 2021 by Dr. Debra L. Brown and David A.H. Brown. All rights reserved.
Printed in the United States of America
Published by Ethos Collective™
PO Box 43, Powell, OH 43065
www.ethoscollective.vip
All rights reserved. This book contains material protected under international and federal copyright laws and treaties. Any unauthorized reprint or use of this material is prohibited. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without express written permission from the author.
LCCN: 2021912671
Paperback ISBN: 978-1-63680-047-9
Hardcover ISBN: 978-1-63680-048-6
e-book ISBN: 978-1-63680-049-3
Available in paperback, hardcover, and e-book
Any Internet addresses (websites, blogs, etc.) and telephone numbers printed in this book are offered as a resource. They are not intended in any way to be or imply an endorsement by Ethos Collective™, nor does Ethos Collective™ vouch for the content of these sites and numbers for the life of this book.
Some names and identifying details have been changed
to protect the privacy of individuals.
Every board member, regardless of the size of company, needs to read this clear and compelling explanation of why ESG matters and what they can and must do about it.
—Peter Dey, Chairman, Paradigm Capital,
Corporate Director, Co-Author, 360 Degree Governance:
Where Are The Directors in a World in Crisis
"ESG Matters illustrates just how easy it is for us to do well by doing good!"
—Craig Larson, CEO and Chairman of the Board, Starion Bank
ESG is an irreversible and powerful movement in capitalism and corporate governance, reflecting the fundamental importance of stakeholders - not just shareholders - both as a legal and a moral duty. This book is both timely and practical.
—Brita Chell, FCPA, FCA, ICD.D, Chair,
Winnipeg Airports Authority
Debra and David Brown have written a must-read primer for any organization wanting to know what ESG is about. I greatly appreciate their experience and wisdom.
—Rev. John Pellowe, MBA, Dmin,
Chief Executive Officer,
Canadian Centre for Christian Charities
"ESG Matters is the essential guide to understanding ethically and socially responsible strategy and governance issues. Stakeholders are now demanding that firms and organizations understand and engage with ESG strategies and measures. This comprehensive work by Brown & Brown is a thoughtful introduction and guide to encompassing ESG in organizations. I particularly appreciated the valuable ESG Pulse Check tool and helpful diagnostic questions that will help organizations get started on their ESG strategy and governance journey."
—The Rev. Dr. Marc Jerry, President,
Luther College Regina
"All good Boards need to include ESG in their agenda and ingrain it in the organization’s strategic plan. From our climate crisis (forest fires and air quality), commitment on carbon neutrality to human rights challenges, ESG Matters will help you make this journey."
—Bill Chan
Board Director, Chair of the Audit Committee
Vancity Credit Union and Former
Senior Vice President and CFO
Encorp Pacific/ Return-It
To Larry Fink!
Thank you for your letters.
With special thanks to our editor, Lorna Stuber, Alex Martin our illustrator, and those on the Governance Solutions Team who made this book possible: Vicki Dickson, Rob DeRooy, Rafael Mazotine, Dave McComiskey, and Jake Skinner
Contents
Introduction
Chapter 1: What Is ESG and Why Should I Care?
Chapter 2: How the E of ESG Helps Boards Save the Planet
Chapter 3: How the S of ESG Gives Your Organization Its Social License
Chapter 4: How the G of ESG Empowers You to Outperform Your Competition
Afterword
Appendix 1: ESG Pulse Check Assessment for Boards
Appendix 2: ESG Guidelines and Accepted Protocols
Appendix 3: Questions the Board Should Ask About ESG
About the Authors
Governance Solutions: The Ultimate Guide to Competence and Confidence in the Boardroom
Governing in Scary Times: The Board’s Roadmap for Governing Through and Beyond an Emergency
Bibliography
Endnotes
Introduction
Do you want to make more money, save the planet, empower people, have a clear path to your social license to operate, and outperform your competition? Did you know that Environmental, Social, and Corporate Governance (ESG) is the key to achieving those goals? In fact, organizations that adopt ESG standards are more conscientious, less risky, and more likely to be successful over the long term.
Saltwater Brewery, a Florida-based craft brewer, acquired three and one-half billion global impressions in a matter of days with zero dollars of media investment. Why and how did they reach such a milestone? Their success was because of ESG. The brewery cared about what its stakeholders cared about—the environment. Rather than spending their limited marketing funds advertising to their customers, many of whom are surfers, they created biodegradable and edible six-pack rings for their beer. No more worrying about plastic rings making their way into the ocean, harming the environment and sea life. That single move put Saltwater Brewery on the map; they blew the competition out of the water and built a global brand.
Walmart used to be in the news for all the wrong reasons. Its reputation was of an unstoppable force destroying independent retailers in small cities and towns while supporting sweat shops in faraway lands. In 2005 the CEO and board of directors made a significant and conscious shift to become an environmental leader and champion of green supply chains. Walmart has regained significant social license to operate as a result. Today the media rarely attacks Walmart for its corporate practices. Rather, it reports on the company’s climate leadership.
A 2019 McKinsey study reported at least five proven links to corporate performance and value creation from ESG initiatives. The first is top-line growth. The study revealed that a strong ESG proposition helps companies tap new markets and expand into existing ones
¹ and can substantially reduce costs, for example, energy and water consumption costs. ESG can decrease regulatory and legal interventions while increasing access to strategic and friendly regulation and legislation. It can enhance employee motivation, productivity, loyalty, and engagement. And ESG attracts long-term investment and asset optimization.
The business case of ESG is undeniable.
Board members and c-suite executives are rapidly becoming aware of ESG as an integrated way of looking at corporate life. Yet many don’t fully understand how it affects their strategy and reporting at the board level or its comprehensiveness and impacts.
What Is a Stakeholder?
Throughout this book, we will be referring to accountability towards stakeholders; therefore, we should be clear on what is meant by a stakeholder. In a corporation, broadly speaking, a stakeholder is a member of groups without whose support the organization would cease to exist: its employees, customers, suppliers, creditors, and community. Your stakeholders are at the heart of ESG.
Environment
We only have one earth. Individually and corporately, we are all stewards of the natural environment, but we have not protected, nurtured, or renewed it as well as we should have.
The good news is, while the pressure is on, it’s not too late. Organizations can do both: be highly successful and save the planet at the same time!
Social
Social media has put immediate pressure on organizations to treat not only their employees but also their stakeholder groups with flawless integrity and justice. The ability for employees, consumers, clients, and others to report their experiences instantly and publicly with a particular business sets a high bar for organizations to live up to. The slightest slipup can do irreparable reputational damage.
There is good news here too! People are the soul of the organization—the