A company should demonstrate its values in good times and bad.
Last year, ESG support might have lost the momentum it had gained over the last several years, but many board members say the opposite happened. Environmental, social and governance issues are now integral to corporate success regardless of internal and external stressors.
“The character of a corporation is not what you do and say during easy times, it’s what you do and say during tough times. These values really matter,” says director and former American Water CEO Susan Story.
She says several factors determine whether your company will survive and be financially successful over the long term: “how transparent you are, how you follow through on what you say you will do during tough times and how you take a short-term financial hit to do the right thing.
“Those that don’t exhibit those values won’t last.”
Story, who sits on the boards of investment banker Raymond James, mining company Newmont Corporation and Dominion Energy, says many corporations augmented their ESG efforts in 2020. For example, Newmont announced an investment of $500 million over the next five years to address climate goals, and Dominion allocated capital for a strategic move to build the world’s largest offshore wind farm in addition to donating $35 million to historically Black colleges and universities in the nine states where they operate.
In addition to environmental causes, companies have paid more attention to employee well-being, says Gaby Sulzberger, a director of Mastercard and Brixmor Property Group. Management and directors have recognized the stress employees have been under during the pandemic and social unrest, and have responded by initiating open conversations about mental health and how the company can help employees cope.
“In the long run, this time of stress will build muscle and resilience and has elevated the roles our CHROs [chief human resource officers] are playing,” she says. “At Mastercard, we’ve brought our CHRO to every single board meeting, and I like to spend time with him outside of that. We are developing new sets of programs around employee well-being and making additional resources available.”
Instituting these programs will help companies to recruit employees whose values mesh well with the corporate values, Story and Sulzberger say. Customers who are aware of these programs will view the company more favorably, as well. This also applies for diversity and inclusion.
“It doesn’t cost more to be really progressive on diversity and inclusion. It can take more work, it can be more difficult to find candidates, but it doesn’t necessarily cost more,” Sulzberger says. “In fact, it can cost more not to do it.”