A CEO’s perspective on ESG

ESG (environmental, social, governance) is one business acronym I think all CEOs should understand and pay as much attention to as more familiar ones such as EBITDA or EPS, because I believe that if you don’t take care of the former, then the latter ultimately will suffer too.

As a CEO I know that identifying and focusing on the key strategic priorities, when there are so many issues that can distract your attention, is fundamental to both your own and your business’ success. That has never been truer than right now as we stand in the middle of the global COVID-19 pandemic and social awakening around the BLM movement.

As business leaders we are tuned to seek out opportunity, but 2020, more than any year since the global financial crisis, has taught us the importance of both anticipating and managing risk. ESG risk is something all businesses face and, to a greater or lesser extent, have been dealing with for many years (even if it wasn’t then referred to as ESG).

But the pandemic is reminding us that risk management is not a silo-ed activity. You need to consider inter-dependencies and the impact of actions you take in one arena affecting business outcomes in another.

And this is where the ESG framework comes into its own in a way that previous related concepts have often failed to deliver. ESG promotes integrated thinking that both challenges and complements other business priorities.

What I believe and have seen in action with our clients is that good ESG risk management presents tremendous opportunity for operational improvement, attracting investment, engaging with all stakeholders and building a more sustainable and compelling future for your business. Ultimately it builds both short-term value and long-term resilience in your business, which together is better for everyone.

And if business leaders struggle with competing priorities: knowing that something is important but not necessarily where it ranks, then considering ESG risk and opportunities together, in a holistic framework, offers any CEO a path to a focused set of strategic priorities that we all crave.

Neil Penhall, CEO