ESG and company culture and ESG by design

In this piece, we look at how ESG plays into corporate culture and a concept we call ESG by design.

"If you want to embed ESG, you can't do this solely from the executive suite or an individual charged with ESG; you need to embed it into daily decisions of every single employee," says Martijn Eikelenboom, Managing Partner Global Head of Sustainability Strategy Practice at Arthur D Little, a leading management consultancy.

Martijn advocates ESG ambassadors within companies who can become change agents, identify areas where sustainability can be improved, and help with education, to move the needle within the business unit or organisation.

Corporate culture also plays into the issues and challenges of mental health at work. Damien Stork, co-founder of CHX,  breaks it down into how people feel about their work and how that can alter mood and emotion.

"When you look at data produced by the World Health Organisation, globally, over 80 per cent of mental ill-health stems from dis-regulated mood and emotion. Moods and emotions in psychiatric and psychological research refer to brain signals. The mood is brain signals from the brain stem, and emotions are brain signals from the brain's limbic area. These are biological signals, signalling to us how we are doing, but we spend most of our working lives trying to suppress or ignore them. When you put all this in the context of the World Health Organisation data, you realise just how powerful, important and dangerous suppression of moods and emotions can be. When you look at this in the context of organisation cultures, it is very important that leadership and management cultures enable people to express, resolve, and restore those moods and emotions."

Deep dive, Damien Stork on leadership

Deep dive, Damien Stork on company culture

ESG by design

Under GDPR, privacy by design is the idea that privacy considerations need to be woven into the fabric of a company. When designing a new product, privacy needs consideration at the outset. Should we also be looking at ESG by design?

It is analogous to foundations in the construction industry. You build the foundations first and worry about the bathroom taps later. At the moment, ESG feels like a luxury — the bathroom taps, but its advocates say it should be a part of the foundations.

Cecilia Carlswärd, founding partner at Violet Hill & Co,  emphasises sustainability by design — "when we develop products, we design them through the R&D phase, where, I would say probably 80 per cent of the future footprint of a company is decided. So for the product to then be sustainable, it will have to be re-designed. So why not design it to be more sustainable from the beginning."

She compares the issue with how we live. "If you live in a big villa, it might be very fossil fuel-intensive, compared to if we live in an apartment. So it is about how we set up our businesses and the core processes. But it is not just the product; it is also the global supply chain. Where are the touchpoints located? What are the sustainability implications of these different markets, and how do we operate in the supply chain. If we don't do this, we are just playing with data. "

Damien Stork says: "Emotions sit on moods, mood is the most basic instinct we have, but we don't know how to interpret it and then ignore it. So what we want to do is create environments or cultures in which people can interpret how they feel and are acutely aware of how this might impact behaviours, for example, how they interact with others."

"If you can get the people aspect right, how they engage with each other, this is a foundational aspect on which you build your business and ESG programmes, your product, your technology development."

"We need people interacting well and feeling good about it and the impact they have on each other and each other's feelings. "

With Covid and business by Zoom calls, we have become more aware of mental health issues. As Damien puts it:" We don't have a homogeneous mass of one type of person in our business, we have a plethora of different needs, and individual needs have been thrown to the fore."

A much more complex picture has emerged when putting our people at the centre. We have to start with what makes people feel good; that is how we get the best out of them.

The board is no longer something that sits at the top; it also has to listen.

Deep Dive Damion Stork on feelings by design

Stuart Ravens, an ESG analyst, says: "companies are already doing financial reporting by design. Financial software is embedded into the company."  In a decade or so, it will be much the same with ESG.

DeepDive Stuart Ravens on ESG by design

Articles in this series:

What is ESG why do need it?
Is ESG compatible with companies maximising profit and what are the benefits
What is Warren Buffett right to call ESG asinine and what did he mean?

ESG, what, why and how;  Martijn Eikelenboom, Cecilia Carlswärd, Stuart Ravens and Damien Stork on the elevator pitch and tips on implementing ESG