Pro insights from William Cunningham: economist Environmental, Social & Corporate Governance (ESG) expert
Describing 2020 as “tumultuous” is an understatement at best: the Coronavirus, economic recession, climatic events, and racial social justice feel like headlines that bearly scratch the surface. But, maybe, just maybe 2020 can also usher some positive change.
An overwhelming 64 per cent of consumers now identify as “Belief-Driven Buyers” (Suston), particularly the Millennial and GenZ consumer and workforce. These generations are making decisions on where they work and whether they switch or boycott a brand based on where it aligns on political or social issues. This shift is reflected in the general market with a growth of the B-Corporation and ESG (environmental, social and corporate governance) programs.
Actively pursuing positive social and environmental impact alongside financial goals can be challenging. We asked award-winning economist and ESG expert William (Bill) Cunningham a few questions about how to get started and navigate the inherent complexities.
Prox: How would you describe what you do?
Bill Cunningham: I help organizations make the shift from shareholder maximization to human maximization. Overwhelmingly, the corporate focus is the shareholder; the problem is this ignores the importance of social and environmental factors. Now, the market is driving the change, and organizations are finally seeing the value of maximizing the value of life versus profits. Most need help with strategy and implementation.
Prox: What are the most common customer challenges with ESG?
Bill Cunningham: ESG is of business-critical importance. It’s now impacting the corporate bottom-line. Events from the dotcom crash, 2008 financial crisis, BLM movement, to the pandemic are forcing corporate social responsibility. Some of the ways I help:
- How to implement ESG from where to start and what to do first.
- Providing ESG frameworks with real-world examples of success and action plans.
- Making the case, how to convince the board and leadership why ESG is essential, now.
- Networking, connecting the community and businesses to exchange ESG ideas.
Prox: What are some common mistakes when businesses pursuing ESG goals?
Bill Cunningham: You don’t have to look hard to find out when something is PR stunt or feel out when it’s inauthentic because now it’s popular. These are some of the common mistakes I see:
- Lack of transparency and authenticity. It’s easy to see when a corporate is just giving a personal “pat on the back,” especially when the problem started from the corporate. An example is the Deepwater Hozion oil spill by BP in the Gulf of Mexico in 2010. BP put out content applauding their efforts, yet ten years later, there’s still significant and negative environmental impact (that also hurt local economies).
- Shying away or ignoring the problem because it feels uncomfortable, this makes it easy to overlook the systemic factors or root causes of the issues–address this first.
- Not including individuals directly impacted by the issue. Often you’ll find ESG initiatives lead by corporate heads who are out of touch with the problems, yet telling everyone what to do.
- Thinking of ESG as a check box of tactics. Success needs involvement from the top with inclusion from the people on the ground.
- Not building a long-term, sustainable strategy. ESG fails when you look at ESG programs from short-term profitability goals.
- Funding or donating investment towards contradictory initiatives that deplete the investment for ESG programs, it’s not hard for consumers and employees to follow the money trail.
- Not implementing company-wide accountability to ensure ESG initiatives are executed.
Prox: What are some tips for creating successful ESG programs?
- You have to identify the root cause of why the problem exists.
- Don’t shy away from the truth, even if in the short term it looks bad for business.
- Acknowledge the issue, identify the shortcomings, and apologize for the wrong.
- Put together an action plan with clear and transparent milestones.
- Give power to employees of impacted groups.
- Establish a policy that provides job security so people will participate and challenge the root cause of the problem.
- Ensure that your employees can back up any public statements from the top.
Prox: What brands are doing ESG the right way?
Bill Cunningham: The theme is really about putting your money where your mouth is. There are a lot of brands making efforts towards ESG, a few that come to mind: Golden State Warriors, Nike, Netflix, Ben & Jerry’s. There are also a lot who have fallen short.
Prox: What do you think 2021 holds for us? Trends?
Bill Cunningham: Unfortunately, with the pandemic and resulting economic downturn, we’re going to see a lot more business closures, especially in underserved communities. At the same time, we’ll likely see an increase in professions or jobs that address social and environmental issues. Despite this, a significant shortfall is it will probably take longer to help communities where it’s needed most, first.
Adopting ESG means reduced risk, shows good management, can motivate your team and shows long-term strategic thinking. Ignoring ESG can lead to increased risk and poor long-term business performance. It’s no longer a question of why you should implement ESG initiatives into your organization, it’s now about how to implement environmental, social, and corporate governance the correct way.