Dr Axel Kravatzky, business consultant, discusses how organisations find purpose through the environmental, social and governance measures they are adopting now.
There has been a bewildering growth in companies of environmental, social and governance (ESG) measures. Some listed companies have to report on 2,000-plus non-financial indicators representing aspects of what their stakeholders are interested in. Over the past few decades there has been a complete flip in the value composition on company balance sheets: 80 per cent of value is now intangible, and 20 per cent tangible.
It used to be the reverse. The power of what consumers and stakeholders say has increased dramatically, and companies are listening.
There is a well-established saying that “what gets measured gets managed.” Institutional investors are interested in safe and productive investments. They need to know if today’s actions will produce returns; they also know that financial returns depend on the environmental and social impacts as well as the practices and outcomes of governance.
Shareholders, boards, executives, and staff of companies who take their future seriously want to know what direction they are moving in, what risks they are facing, and where the opportunities of the future lie. Stock exchanges, securities regulators, central banks, bankers, utilities and their regulators, governments – they all want to know if the actions of the organisations they regulate, lead or serve, are generating value over the time, rather than contributing to risks for society and the economy and in the process destroying the very basis of existence.
The media and civil society seek to inform and act in the interest of citizens and so they too want to know if there is progress or decline.
Ever-increasing evidence of the fundamental disruptions are all around us. The urgency and gravity of the situation led to an exponential global rise in investment funds and stakeholders interested in making meaningful ESG impacts.
That is why outdated corporate governance models, outdated business and accounting models must give way to the challenges and opportunities we are facing now.
[caption id="attachment_909959" align="alignnone" width="1024"] Alyxa Patton and her brother Dante plant moringa seeds at Let's Plant a Mini Forest on World Forest Day the launch of Sustainable Agricultural Carbon Sink, Waterloo Road, Couva on March 21, 2021. Caribbean countries are behind in meeting sustainable development goals. File photo -[/caption]
The IFRS Foundation is currently still receiving consultation comments on amending its constitution that would lead to a proposed creation of an International Sustainability Standards Board (ISSB) and include climate-related disclosure requirements in a first instance.
Some 164 member countries of ISO have been balloted and agreed to adopt ISO 37000 Governance of organisations – Guidance and organisational purpose is at the very centre of governance in the 21st century. TT, St Lucia and Jamaica are represented and their
