It’s a shame that some people perpetuate the culture-war trope of ESG (environmental, social and governance) being part of a woke agenda.

In reality, ESG is a structured way for investors and lenders to assess the preparedness of organisations for the future.

ESG asks whether companies have assessed the risks and opportunities material to their performance, in areas ranging from climate change to nature loss, and human capital to supply chain surety.

ESG also provides a way for organisations to embed sustainability into their strategies, and then demonstrate their performance to workers and customers, to build trust and enable them to make informed choices.

Some estimate intangible assets as making up more than 90 per cent of a modern company’s value.  Critical to this intangible value is a company’s reputation, which is increasingly driven by sustainability performance.

Australian corporate law requires directors to make decisions in the best interests of the company.  Some interpret this as meaning maximising profits for shareholders. 

I can’t think of too many companies whose profits will increase in an overheating world, facing ecological collapse and societal disruption.

If people could move on from the decades-long culture wars, they would see ESG for what it is. A way of creating and protecting shareholder value, reducing inequality today and giving our kids some chance of having the quality of life we’ve taken for granted.

This article also appeared in The West Australian newspaper.

ReGen Strategic offers an end-to-end sustainability and ESG service.  For more information, please click here.

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