The human brain has flaws. That’s the bad news.
The good news is we have a good idea of what these flaws are. They’re known as ‘cognitive biases’.
You can’t get rid of cognitive biases because they’re hard-wired in your brain due to thousands of years of evolution. But if you’re aware of them, you can limit their impacts.
One such cognitive bias is ‘status quo bias’ and it’s present in the workplace.
As a result of status quo bias, you may prefer staying in your comfort zone and not doing anything that will change the current state of affairs.
But sometimes there are developments that force you to embrace change. That’s where ESG enters the picture.
ESG’s impact on the workplace
Environmental, Social, and Governance (ESG) factors are changing how companies conduct business in many ways, including:
- New ESG or climate-related disclosure regulations to comply with, especially in Europe.
- The need to effectively identify and manage ESG risks (including compliance, financial, and reputational risks), and integrate them within the existing enterprise risk management framework.
- Bringing a host of environmental and social metrics at par with financial information, especially with regards to data quality. There is a growing need for investor-grade ESG data.
- Ensuring that ESG factors give you a competitive edge in attracting investors, customers, and talent.
But there’s another change brought by ESG that’s not getting enough attention: The effects on workplace interactions.
Firms that ‘get ESG right’ understand that ESG isn’t the responsibility of only one person. You can’t simply appoint a Vice-President or Director of ESG, or just place ESG under the Chief Financial Officer or Chief Sustainability Officer.
Also, different departments can no longer work in their own little world with occasional collaborative efforts across functions. The important changes brought by ESG will also bring fundamental changes to the workplace.
The ESG team
ESG is a team sport. People from different departments will have to work together as part of a single team.
You may be in Finance, Legal, Risk, HR, EHS, Sustainability, Operations, IT, or Procurement, but now, in addition to your regular teams and colleagues, you will also be part of the ESG team.
And your company’s ESG team will play a critical role because strong ESG performance drives corporate performance.
This represents a significant shift because suddenly key employees will have to align with a new set of stakeholders. They will have to work together with colleagues they might not have worked with before, or even knew. Here’s a sample of the types of interactions to expect:
- EHS will have to provide key metrics to Finance for combined financial and ESG (or non-financial) reports.
- EHS will also have to show to Finance and auditors (internal or external) how they provide limited or reasonable assurance on the data.
- Procurement will seek guidance from EHS and the Sustainability team on how to capture greenhouse gas emissions data to calculate Scope 3 emissions.
- HR will be asked to provide more tangible metrics on DEIB to Finance for inclusion in the combined financial/ESG report.
Did you bring together key stakeholders across departments as part of your ESG strategy?
Have you recruited members of your ESG team yet?
If you want to learn more about this topic, you’ll be interested in a session at NAEM’s TECH23 ESG & EHS Tech Week event on March 14-16 in Tucson, Arizona.
On Thursday March 16, the opening keynote ‘ESG as a Team Sport: Moving Beyond Reporting to Accelerate ESG Performance’ will take place and feature a stellar line-up of speakers, including:
- Maria Montenegro, Senior Vice President of Strategy & Innovation, Wolters Kluwer
- Vrushali Gaud, Managing Director, ESG and Sustainability Services, Accenture
- Haley Engelberth, Global Sustainability Manager, AGCO Corp.
Be sure to catch the session if you’re at NAEM’s event.
