One of the biggest movements in corporate circles right now is ESG (Environmental, Social, and Governance), which breaks down to corporations needing to worry about the impact of their operations, give back to the community, and have strong ethics and mechanisms to enforce those ethics. Customers want to have faith that the businesses they patronize are making ESG efforts and are directing their spending accordingly. This trend is on the rise and has been for the last few years.
However, for ESG to actually be what customers want it to be, there has to be a 360 degree review of a company’s ESG activities, from statements to actions by a neutral third party. There is no point in being great at ESG if the results are automatically under suspicion because they are almost entirely self-reported.
ESG need reliable third party trust and verification
Companies and their positions on ESG need reliable third party trust and verification. Cynics look at ESG as a marketing exercise, a litany of promises, FAQs, infographics, and green-tinted photo-ops. Particularly when it comes to measuring things like carbon offsets, or community impact. Or things that corporations would rather not measure or disclose, such as how often their ethics hotline gets called and how often concrete action is taken at that level.
There needs to be a trusted organization to set standards and to verify claims and conduct 360 reviews. These organizations cannot be for-profit, nor can their governance be composed of corporate executives. Appropriate organizations would be along the lines of Consumer Reports or Underwriter’s Laboratories, or if absolutely necessary a government body.
They can establish standards, review and audit ESG reports, and offer assurance to end customers that a given corporation’s ESG efforts are more than overtime for the marketing department. Without some kind of neutral third party certification, the ESG movement will waste away under a mountain of greenwashing, creative reporting, and obfuscation. Customers are already plenty cynical, let’s not allow a good movement to fade due to a lack of good faith.
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