Environmental, social and governance factors have increasingly gained importance in business due to growing awareness about companies’ impact among consumers, investors, regulators, and society. Lay the foundation to respond to new compliance requirements and risk management by defining diverse corporate trends converging on the correct implementation of ESG criteria.
The goal is to develop and operate sustainable supply chains that support good jobs and inclusive growth, produce sustainable products and services, and ultimately achieve a net-zero, climate-ready world.
We work with leading brands and retailers to retool their supply chains to create products that meet the highest socially and environmentally responsible production standards while supporting thousands of suppliers to upgrade their operations to compete in an agile, digital and sustainable world.
Besides the ten areas of sustainable governance in another blog, we provide XX additional areas where companies prioritise and strengthen corporate power and command authority to achieve the corporate short- and long-term interests.
1. Director and senior management independence
Independence is critical for a board’s effectiveness in achieving strong governance. Companies must foster this independence and prevent conflicts of interest, improve objectivity and impartiality in decision-making, and discover new perspectives for strategic decision-making.
Identify the number of years when independent directors and senior executives must retire. Commercial or personal relationships do not promote impartiality to prevent individuals from being disseminated in the organisation. It is vital to carry out periodic self or independent evaluations of independence.
2. Diversity, Equity And Inclusion
Develop a broader business vision that can improve the organisation’s diversity. Identify the valid diversity criteria, such as gender, nationality, age, disability, ethnicity and even race. Include and emphasise the value of diversity in directors and management positions. Evaluate the perspectives, experiences, and better decisions where diversity contributed to significant innovation, creativity and flexibility.
A study by the Credit Suisse Research Institute identified a positive correlation between increased gender diversity on boards and improvements in financial returns, ESG performance and the stock market, a press release by the company said. Likewise, research by McKinsey found that companies with diverse teams outperform their competitors.
3. Executive Compensation
Increased attention is paid to compensation, remuneration and benefits that are considered excessive due to the economic crisis. Conceptualise the public scrutiny if it affects the short-term corporate goals. Assess how the goals are achieved before implementing a comprehensive, fair compensation system that encourages good performance, productivity (short-term), ethics and integrity (long-term.) The system should balance competitiveness and equity of payment and opportunity throughout the organisation.
The rise in applications, systems, networks, and technological crimes has increased companies’ concern for cybersecurity. All cyberattacks cause significant financial losses, damage to reputation, exposure of private information and other negative consequences, including for the people who comprise the organisation and its customers. The fines with GDPR placed an additional economic burden on the organisation.
The director’s tone at the top must guarantee that their company has cybersecurity measures in place and create a culture of prevention as technology advances and sophisticated new cybercrimes rapidly emerge.
The growing demands from regulators, investors and consumers impact companies’ profitability and other financial results if the business does not commit to ESG criteria. Companies must prioritise this issue strategically to mitigate risks and position themselves as sustainable, with clear actions and agendas to measure the effectiveness where sustainability practices go beyond marketing.
Global Sustainability Certification
The global ESG Standard ESGUIERA provides the pathway to a sustainable future and emphasises standardisation, value-, creation, and preservation. ESGUIERA addresses legislation, standards, products, and ideas crucial for achieving global sustainability certification.