Doing Well by Doing Good:
How Responsible Organizations are Addressing Societal Challenges
For decades, various management concepts have challenged the Friedman doctrine that a business’s sole obligation to society is to generate profit. The Environmental, Social, and Governance (ESG) movement has gained prominence in recent years, joining other approaches to sustainability and social purpose, such as Corporate Social Responsibility, B Corps, and Conscious Capitalism, in exploring an organization’s broader societal impact. Going beyond aspirational values statements, charitable giving, and responsible policies, ESG measurement and reporting quantifies how well an organization’s actions align with its commitments and provides a mechanism for accountability to stakeholders.
ESG ratings are primarily used by investors to guide their decisions, but other stakeholders, including workers, customers, and regulators, are also taking interest in whether an organization’s policies and practices meet their expectations. Accordingly, prospective employees, business partners, and collaborators increasingly expect the organizations they form a relationship with to address issues they see as important and behave in ways consistent with their own values. Similarly, boards of directors and other governance bodies are establishing oversight and accountability mechanisms for ESG efforts, such as tying executive compensation to performance in these areas.
ESG models cover a wide range of critical issues:
- Environmental – conserving natural resources, reducing waste and pollution, and adopting renewable energy sources;
- Social – promoting diversity, equity, and inclusion, engaging in fair labor practices, and enhancing health and well-being; and
- Governance – providing transparency and accountability, diversifying boards, and ensuring that executive compensation is equitable.
Despite these positive trends, the ESG movement is not without its challenges. Criticisms include inconsistencies in methodologies, criteria, and scoring systems, superficial requirements that may serve only to minimize financial risk, an all-and-everything approach that reduces complex issues to a meaningless overall rating, and scepticism about whether ESG reporting is just window dressing and PR spin akin to greenwashing. Additionally, while the Social component of ESG efforts focuses on people issues, current reporting mechanisms do not always explicitly include an organization’s health and well-being efforts, which may inadvertently reduce employers’ prioritization of this area. So, the questions remain: Will ESG frameworks actually move the needle? Is doing good actually doing any good? And is the ESG approach a sustainable movement that can help drive social change?
Forum23 will explore the alignment between workforce health and well-being efforts and the ESG movement. With case examples from exemplary organizations that are leading the way in social impact, as well as featured speakers from ratings bodies, investment firms, governance affairs advisors, industry and labor, we’ll grapple with how ESG frameworks are currently defined and measured, the effects an organization’s ESG efforts can have on workers, where workforce health and well-being fits into the mix, and how successfully addressing societal challenges can help drive organizational performance and population health.