The “ABCs” of ESG: Understanding the Business Imperative - in conversation with Alexandra Morehouse
In corporate boardrooms around the world, a topic of rapidly evolving focus is environmental, social, and governance (ESG) issues. According to the Center for Audit Quality, 95 percent of companies published an ESG disclosure in 2020. The Securities and Exchange Commission (SEC) recently raised the bar on the “E” part of the equation, announcing proposed rules on how publicly traded companies will need to report, in their audited financial statements, the risk to their businesses from climate change.
We’re in conversation with Alexandra Morehouse, a mission-driven collaborator and experienced board member who has deep expertise in ESG, to explore the many considerations of this emerging business imperative.
Alexandra, you’re often described as an ESG influencer, so you’re well-versed in this area. What is ESG, from your perspective, and why it is so important for today’s, and even more so, tomorrow’s businesses?
“For smart organizations, ‘doing good’ is no longer a sidebar activity. The non-financial parts of the performance equation — environmental, social, and governance — are core considerations in doing business.
“A seminal book published in 1982 by Peter Fisk, People, Planet, Profit, brought to light how building a sustainable future hinges on the ESG proof points. Is your organization conducting business in an environmentally sustainable way? Are you addressing social inequities and ensuring diversity and inclusion? Is your board composed of directors with varied backgrounds and a growing understanding of ESG principles? Are they effective in setting your organization’s strategic direction — and culture — to include ESG objectives?
“In recent years, four turns of the wheel have driven us forward to an ESG-centric destination.
“First, is the concept of responsible investing, which has been around for several decades. As early as the 80s, socially responsible investors refused to put their money into companies whose products — tobacco, for instance — were perceived to harm the greater good.
“Second, the World Economic Forum in Davos, Switzerland, in 2019. This event brought to light the stark challenges we share, from global climate change to the many among us who are living at the margins of our social structure. The message from that meeting was blunt: Unless we bring economic pressure to bear, we will continue to erode our planet, our society, and our children’s future. We need — urgently — to pay attention to what’s happening, assume accountability, and together, take bold, corrective action.
“Third, COVID-19. We realized a virus doesn’t care about our geopolitical boundaries. The pandemic heightened awareness of how interconnected we all are — and how rapidly external shocks can reverberate through the entire global economy. In the same timeframe, we were faced with the injustice of the killing of George Floyd and the racial inequities that still prevail in our country.
“Fourth, in the aftermath of the pandemic, we’ve been part of what’s been called “The Great Resignation,” more aptly described as “The Great Reevaluation.” Workers are reassessing their priorities, and for many, that’s led to a decision to change employers. In turn, employers are reevaluating changes they need to make to prevent losing top performers, including creating companies with socially conscious cultures and more meaningful missions.
“As a result of these four drivers, ESG has grown from the simple concept of responsible investing to a robust corporate strategy for creating long-term value across a broad and diverse group of stakeholders.”
Thank you, Alex, for sharing your perspective with us.
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More about Alexandra: Alexandra Morehouse is a mission-driven collaborator and seasoned board member, with deep experience in ESG, risk management, and digital transformation. She currently serves as the chief digital officer and chief marketing officer for Banner Health and is a national thought leader in diversity, equity, and inclusion.
