As for the G in Environmental, Social, and Governance (ESG), it's about a company’s behavior, ethics, practices, and related measures that social aware investors use to assess possible investments. But it’s also about current and prospective employees who seek to work for a company that embraces good corporate governance along with Environmental and Social measures. The G in ESG is every bit as important as the E and the S. And it’s not just investors and employees as consumers are highly interested in companies that promote sound business practices.
Look at the "G" in ESG as the decision-making governance considerations - the very governance factors range that from sovereign policymaking to the allocation of rights and obligations among various organizational stakeholders, such as the board of directors, management, shareholders, and stakeholders.
For organizations seeking to embrace the G in ESG, it should mean the following:
- Developing and implementing a strong system of risk management and controls.
- Fostering a culture that advocates honesty, transparency and ethical behavior.
- Maintaining effective leadership throughout all levels of an organization.
- Participating in political engagement and public policy.
- Safeguarding privacy and cybersecurity by implementing robust internal controls.
Thus, measures to include when embracing the G in ESG are the following:
- Boardroom diversity
- Compliance
- Compensation
- Ethics