More and more businesses are turning their attention to the rapidly evolving business operating standards and reporting practice known as ESG - Environmental, Social and Governance. ESG captures how a company plans and meets their sustainability and inclusivity goals, and accounts for all its operations’ impacts through corporate performance, culture and sustainability measures.
ESG is not a new concept. Organizations in British Columbia and across Canada have been factoring ESG considerations into decision-making for years. However, more recently, an array of influences have driven a sharp rise in the need for organizations to consider embedding meaningful sustainability and inclusivity practices, and reporting on the material impacts of their business.
Sound ESG practices have been linked with stronger operational performance, company valuations and higher returns. As a result, investors of all types are increasingly evaluating the strength of a company’s sustainability and ESG performance as part of their investment decisions. In addition, other stakeholders, including customers, employees and regulators are also increasingly assessing how organizations are planning for, and incorporating, long-term, material sustainability and inclusivity considerations into their overall operations.
This practice also reflects the long-standing approach by many Indigenous communities to assess future impact over seven generations.
We know that customers and employees are increasingly looking to do business and work with companies and brands that are aligned with their personal and societal values. Today, people have the means to investigate and determine which organizations they want to support.
As a result, business viability and risk-mitigation strategies require organizations to articulate their values and take demonstrable action on matters related to climate, environmental and community impact, including actions on diversity and inclusion. By defining their values, organizations can be proactive and shape their own ESG narrative before someone else does.
ESG strategies are usually highly customized and reflective of the material impacts, interests and priorities of each individual organization, as well as the expectations of their key stakeholders, investors, lenders and creditors. Informed through strong governance and planning models, organizations incorporate transparent procedures, systems and reporting tools to ensure to that ESG factors are reflected across their culture and in all key strategic decisions, and communicated broadly.
A company's ESG reporting also creates another avenue for stakeholder and rights-holder engagement and for organizations to demonstrate they have incorporated stakeholder and rights-holder interests into their decision-making processes.
This work is not limited to large publicly traded companies or those in the natural resource industries but is a framework relevant to all sectors from the apparel industry to professional services, transportation and technology. Small-to-medium sized firms need to consider consumer expectations and that of their partners up and down the supply chain, as well as expectations of future and potential suppliers of capital. Even post-secondary institutions and governments are examining how their values and their environmental and social impact are being measured.
British Columbia businesses are uniquely positioned to grow our shared prosperity by taking advantage of ESG's momentum. When thinking about creating and delivering a sustainable economy, British Columbia has many strengths. Our province’s energy and natural resource exports are among the lowest in carbon intensity in the world, supported by our abundance of clean renewable energy, innovation and expertise. We have a culturally diverse population and communities with global perspectives. British Columbia is driving an accelerated focus on Indigenous peoples as rights-holders through partnerships and community building.
Throughout the province, we have modern and digitally connected infrastructure and networks to efficiently move goods and people to where they need to go with an increasingly shrinking carbon footprint. We have world leading post-secondary institutions, and perhaps most importantly, we are fortunate that so many talented, skilled and entrepreneurial people call British Columbia home.
B.C. has many naturally ingrained strengths. If governments can work collaboratively with business to create and support the right conditions and policies, British Columbia can attract ESG driven investment, create good jobs and grow a more prosperous, inclusive and productive province that supports families and communities.
Together, we can act on the opportunities in front of us. The world will not wait for British Columbia to meet shifting expectations – it’s up to us to act on our future together.
Radha Curpen is Vancouver Managing Partner of Bennett Jones. Greg D’Avignon is President & CEO of the Business Council of British Columbia.
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