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For years, companies have embraced corporate responsibility, then sustainability and now ESG (environmental, social and governance). For the most part, it’s the same bag of goods, only with different packaging. That isn’t necessarily wrong or bad, especially if the outcomes are better for people, profit and the planet.

Today’s challenge, however, is that just when the business community has found a way in which to explain this work, now it's finding that ESG is under attack — and although yesterday's midterm elections, as of press time, hardly amounted to a "red wave," many business leaders will still have their doubts about the ESG movement's viability.

But ESG isn't doomed. If anything, companies have the opportunity to win over consumers, i.e., hearts and minds, with their ESG strategies. Why? Well, to start, a recent Fordham University survey found that about two-thirds of all consumers are still by and large unfamiliar with ESG. But despite that unfamiliarity, they are willing to hear more anecdotal stories about their companies’ ESG efforts and could reward them with more purchases and increased loyalty.

The problem, however, is that many companies are getting the communications part of this all wrong — and they will want to rethink how they talk with key stakeholder groups, starting with consumers.

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“The reality is that sustainability and corporate social responsibility are inherently easier concepts for consumers to understand and embrace than are the environmental, social and governance labels,” said Lerzan Aksoy, Ph.D., Interim Dean and Professor of Marketing at Fordham University’s Gabelli School of Business, which partnered with Rockbridge Associates on this research. “Perhaps most importantly, consumers want stories based on evidence that personally resonates with them.”

While sustainability and ESG professionals understand that governance, social and environmental challenges are all important, for consumers it’s a different ballgame. Consumers are still focused on a company’s environmental performance; as for governance, that’s a subject still very abstract to many consumers — the “G” in ESG may very well be for investors and other stakeholder groups to keep their eagle eyes on.

As for the social, while there’s plenty of evidence suggesting that companies can do just fine while taking a stand, this is where the gaslighting from politicians comes in, as Aksoy suggested. “The term sustainability is easier to understand for consumers so I doubt that the term ‘ESG’ will resonate positively with consumers in the near future, although it is being hammered by the governors of Texas and Florida, Elon Musk, and even the cartoon Dilbert by Scott Adams,” she futher explained to TriplePundit. “The problems result in part from the ability to manipulate components of the social construct to offset environmental issues.”

The Fordham-Rockbridge research also found that the ways in which ESG ratings evaluate companies isn’t resonating with consumers. That’s not to say companies should resort to greenwashing — far from it. If anything, companies should keep communicating their environmental progress, and to a lesser extent, social impact when appropriate. But there’s a difference in what should be communicated to key stakeholder groups such as investors and what is directed toward a company’s customers.

“Currently there is not a statistically meaningful relationship between firms’ social and governance ratings and how customers perceive their social innovativeness,” Aksoy said. “There is a weak but significant relationship between environmental ratings and customer perceived social innovativeness, but these relationships are likely to vary wildly given that there are well over 100 organizations measuring, monitoring, and communicating about firms’ ESG performance. Although the aim is to create meaningful distinctions, they instead create confusion among customers.”

Confusion is also sown when companies communicate too much, and therein lies a barn door that the likes of Elon Musk and the governors of Florida and Texas have opened wide, big time. “Too much ESG information can lead to customer numbness to the issue. Second, research suggests that communicating environmental rather than social issues has a bigger impact on customers,” Aksoy added. “And, there is little to no scientific research on the importance of governance issues relative to environmental and social ones, although our study found it to be significantly lower in importance.”

As for that barn door, there’s still time to slam it shut and allow companies to lead on the ESG narrative and counter any political attacks on this movement. “To increase customers’ ability to process ESG messages, previous research suggests that firms should leverage what is already salient to customers. For example, when a firm engages in a cause that customers perceive to be appropriate for the firm (i.e., high firm-cause fit); this increases the effectiveness of ESG communications,” Aksoy noted. “Similarly, ESG efforts with a clear connection to firm operations lead to positive customer outcomes. An examination of the research to date suggests that communicating ESG efforts in ways that make them appear tangible to customers is key.”

In the end, it’s what we’ve been taught all along: It’s not what you say, but how you say it. To that end, companies and their comms teams need to talk to and with their key stakeholder groups, not at them. “The reality is that sustainability and corporate social responsibility are inherently easier concepts for consumers to understand and embrace than are the environmental, social, and governance labels. Perhaps most importantly, consumers want stories based on evidence that personally resonates with them,” Aksoy told 3p.

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As more women join the U.S. military, government agencies and nonprofits are tailoring their veterans’ services to focus on the circumstances of women as they transition from military service into civilian life. Companies that advocate for veterans can take a cue from these efforts, and expand their impact on women veterans in business.

The bottom-line case for investing in women veterans

The numbers do favor investor interest in women veterans as entrepreneurs. The military-focused company Sandboxx has been advocating for veteran entrepreneurs through an online resource library and through its media organization, Sandboxx News. Last year, Sandboxx News assembled a set of statistics aimed at motivating investors to pay more attention to veteran entrepreneurs in general, and veteran women entrepreneurs in particular.

“Startups founded and cofounded by women actually perform better over time than those started by men, generating 10 percent higher cumulative revenue over a five-year period: $730,000 for women compared with $662,000 for men,” Sandboxx reported, adding that women veterans have been the fastest-growing segment among entrepreneurs in recent years.

“One in 10 veterans are women, but they own one in six veteran-owned businesses,” Sandboxx explained.

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Sandboxx also noted that the number of women-owned businesses increased by 45 percent from 2007 to 2016, while the number of women veteran-owned businesses increased much faster, by 295 percent. However, the rate of investment has failed to keep pace.

“Female entrepreneurs receive just 2 percent of all capital investment and only 4.4 percent of total dollars in small business loans. What this means: They need more investors!” Sandboxx concluded.

Support small business incubators for women veterans

The network of advocacy for veteran women entrepreneurs is growing. That has created new opportunities for companies to grow their engagement activities.

The nonprofit 501(c)(3) organization Bunker Labs, for example, has enlisted Ford, Macy’s and other high-profile brands to support veteran entrepreneurs. The organization runs a six-month Veterans in Residence incubator for veterans, their spouses and other family members. With a focus on diversity, Bunker Labs assesses that its community includes twice as many women veterans than the overall veteran population.

Companies can also get involved through their foundations. Last year, the Veterans Administration's Office of Small and Disadvantaged Business Utilization collaborated with the PenFed Foundation to host a series of small business training sessions for 100 women veteran entrepreneurs.

The six-month program focused on the federal contracting system and was capped by a pitch competition with prizes in the form of grants.

The PenFed Foundation is a 501(c)3 nonprofit supported by the Pentagon Federal Credit Union.

The federal Small Business Administration has also been focusing attention on women veterans, and its models can be applied to private sector advocacy. In particular, Sandboxx takes note of the SBA Entrepreneurship Training Program. The program supports programs run by nonprofits like IVMF (Veteran Women Igniting the Spirit of Entrepreneurship) and ONABEN, which focuses on tribal and rural communities. 

Traditional giving is still important

In addition to entrepreneur engagement actions, companies can also make a difference by steering more funds towards organizations that focus on women veterans.

One good place to start is the Foundation for Women Warriors. FWW began as a 1920’s-era home for military widow and mothers, and it has recently embraced a broader model of self-sufficiency. The organization offers a suite of services including childcare assistance and professional development, as well as emergency relief. 

“There are over 40,000 Veteran Service Organizations across the United States and just a limited few focus their programs on the needs of women veterans,” the organization notes.

Another example is Operation Dress Code, a local organization that stages pop-up boutiques stocked with donations of professional clothing and accessories.

“The boutique is the focal point, but Operation Dress Code is about more than a new business jacket or pair of shoes, it’s about an experience. It’s about creating a safe space where women help women,” Operation Dress Code explains.

The National Veterans Foundation lists several other women-centered veterans organizations including Operation Reinvent and the coalition Women Veterans Rock. The organization Women Vets USA also provides a comprehensive listing that includes professional associations, crisis centers and other resources.

Prepare for new challenges

The new wave of activity in support of veteran women in business is encouraging, especially in the context of long-term trends.

The news organization Military.com (an affiliate of Monster Worldwide) notes that veteran entrepreneurship was far more common in the 20th century. As described by a 2016 study from the Institute for Veterans and Military Families at Syracuse University, almost 50 percent of World War II veterans were self-employed. Entrepreneurship still ran high among Korean War veterans, at 40 percent.

In contrast, only 4.5 percent of post-9/11 generation of veterans have been self-employed.

“It's a stunning statistic, given the resilience and skillsets veterans acquire in service,” wrote Military.com reporter Blake Stilwell.

Stilwell noted that the study highlights a significant increase in resources for veteran entrepreneurs. However, significant obstacles remain, topped by “a lack of social capital, adequate mentorship, maintaining a positive work-life balance and financial factors,” he observed.

The Institute for Veterans and Military families anticipates that its latest survey of military-affiliated entrepreneurs will provide additional insights leading to programs that help more veterans start their own businesses.

In the meantime, private sector allies need to be prepared for rising challenges that can impact women veterans more so than men. Women face additional PTSD factors compared to men in the military, they shoulder the greater burden of family worries, and military service is linked with a significant increase in breast cancer risk. 

Above all, business leaders need to push back against the U.S. Supreme Court in the Dobbs case last summer, which relegated all women, in military service and out, to the status of second-class citizens at the mercy of state lawmakers.

Some state legislatures have acted swiftly to reassert the fundamental human and civil rights of women in the wake of Dobbs, and the Biden administration is working to ensure abortion access at VA facilities.

However, the damage has already been done. In addition to direct impacts in abortion-banning states, the ripple effect leading to abortion access issues throughout the country, concerns are rising that VA medical staff is vulnerable to prosecution under state law, and Republican leadership has already committed to a national abortion ban.

Women in the military are facing more danger while in service than ever before. Companies that profess to support them in civilian life need to respond to the challenges that women veterans face today, with equal force and determination. 

Image credit: Adobe Stock (Yakobchuk Olena)

As COP27 launches this week in Egypt, it has become clear that global leaders understand something has to be done to take on the climate crisis. Of course, understanding, developing a plan and then actually executing it are three separate things — the globe can’t embark on a plan or program if there’s no roadmap in the first place.

So, what needs to be done if we’re going to avoid “climate hell,” as the head of the U.N. said as he opened the COP27 meetings? Sure, we need to invest funds to curtail climate change’s risks, as the U.K.’s prime minister reminded COP27 attendees yesterday. But does that mean more spending on renewables, more plans to stop deforestation, or, as poor countries have insisted, to follow up on rich nations’ pledges to pay for climate adaptation and mitigation projects?

While politicians continue to agree to disagree — or in what is often the warped drama of life imitating art, disagreeing on how to agree — there’s one approach for which few leaders have advocated.

It's finally time to stop talking about catastrophes that are still an abstract to most people and frame climate change in very real terms. Why not take a health-centered approach to take on the climate crisis?

Doctors certainly appear to be onboard such a plan, based on a recent report the Lancet has published. Among the many takeaways, three of them stand out in this report.

The climate crisis is undermining global healthcare systems

Many citizens are already facing limited healthcare options, largely due to inflationary pressures, geopolitical crises including war, and dependence on volatile sources of energy. The global pandemic has also done a number on healthcare systems, as COVID-19’s effects including supply chain disruptions haven’t helped. But as a result, the researchers behind the Lancet’s findings have found that about 30 percent out of the world's largest 800 cities worldwide have cut their climate action programs — and such downsizing has come at a time when extreme weather events linked to climate change put more people at risk.

“In 2022, unprecedented global health, economic, and conflict events have critically worsened public health, with climate change exacerbating the impacts of many of these events,” wrote the report’s authors. “Without global coordination, transparency, and cooperation between governments, communities, civil society, businesses, and public health leaders, the world will remain vulnerable to international emergencies.”

Healthcare networks won’t be able to cope with the surge in heat-related deaths

We’ve long known the long-term health impacts of the climate crisis. The rapid spread of infectious and zoonotic diseases are among such threats, as the COVID-19 pandemic made loud and clear two years ago. 

And even if people flee the coasts toward higher elevations to escape the risk of rising seas, they will find that they won’t necessarily be able to flee disease. The Lancet’s report cited research confirming that coastal regions will only be more susceptible to various pathogens. Meanwhile, in regions of higher elevations, the transmission of diseases such as malaria and dengue fever have also increased. 

All of these spikes in disease rates are linked to an increase in global temperatures. And, if the recent past is prologue, we should be worried: Heat-related deaths among the most vulnerable populations (people under one year old, or those over the age of 65) saw an increase of such deaths by 68 percent between the periods of 2000-2004 and 2017-2021.

Our health is at the hands of fossil fuel ‘overdependence’

While many citizens and leaders feel angst over the fact that little progress has been made on climate change since the 2015 COP21 talks, it’s important to remember that these talks have been ongoing since the U.N. hosted a signing of such frameworks in the first place back in 1992. Since that signing in Rio de Janeiro, fossil fuel consumption has increased almost 60 percent.

That impact goes beyond the massive amount of emissions into the earth’s atmosphere. The energy markets' ongoing volatility has continued to result in global supply chain snags, volatile markets and geopolitical conflicts. Further, despite an sizable increase in the deployment of fossil fuels, many citizens across the globe do not have the means to keep themselves cool in summer or warm during the winter; they lack a safe way to cook; and they often lack access to safe secure forms of electricity to keep the lights on. Even more damning, the report found that close to 60 percent of healthcare facilities in low- and middle-income nations lack access to reliable electricity — a harbinger of what’s to come as climate change exacts more of a toll on many nations’ healthcare systems.

“With the worsening health impacts of climate change compounding other coexisting crises, populations worldwide increasingly rely on health systems as their first line of defense,” explained the report’s authors. “However, just as the need for healthcare rises, health systems worldwide are debilitated by the effects of the COVID-19 pandemic and the energy and cost-of-living crises.”

Bottom line, while disinvestment continues in many healthcare systems, energy companies are reaping massive profits, a specter that does not bode well for healthcare systems worldwide as it appears the climate crisis will only worsen.

So, what can be done?

To its credit, the U.N. is increasingly focusing on strengthening healthcare systems worldwide by ensuring they are carbon-smart and climate-resilient. Bold action on behalf of the healthcare sector is a bridge that’s already been crossed — the industry’s total contributions to emissions worldwide stands at a tad more than 5 percent, not surprising considering what it has been tasked with. A global health program focused on climate resilience that emerged from last year’s meetings in Glasgow is showing some progress, note the Lancet report’s authors.

Some countries, however, are hardly getting their climate resilience bang for their bucks: Take the U.S., which has a healthcare system that emits 50 times more emissions per capita than India, yet its citizens can anticipate a life expectancy of only 76.1 years, a decrease so far this decade; meanwhile, India's has increased slightly to 70.2 years.

With that life expectancy statistic in mind, advocates for clean energy might want to change their strategy as to how they can break through to citizens about the human costs of the climate crisis. Talk about pollution, emissions, climate change threats or energy markets’ volatility aren’t getting through to many people — here in the U.S., look at the local traffic during rush hour or the gas lines at Costco or Sam’s Club if you’re not already convinced. 

But viewing the climate crisis through the lens of public health could change hearts and minds, especially if telling (disturbing or upsetting) images were a part of such messaging, as what occurred with the anti-smoking campaigns of a generation ago. From the point of view of the Lancet, change will be difficult, as the number one factor that needs to change is the globe’s addiction to fossil fuels. That means breaking some very entrenched consumer habits, but it comes with an additional payoff, as “increasing energy efficiency, conservation, and the use of renewable energy sources could give healthier, more resilient, and self-sufficient energy systems,” concluded the report’s authors. “Millions of lives could be saved each year by accelerating transition to cleaner fuels, healthier diets, and active modes of travel.”

If you haven’t listened to your doctor recently, then hear this one out. “The burning of fossil fuels is creating a health crisis that I can’t fix by the time I see patients in my emergency department,” Dr. Renee Salas, summing up the Lancet’s report, told NBC News last week. “Fossil fuel companies are making record profits while my patients suffer from their downstream health harms.”

Image credit: Adobe Stock (gajendra)

Lakes, rivers, reservoirs and other bodies of water are evaporating, running dry before our very eyes. Floods are washing out natural areas, neighborhoods and even entire regions across the globe. Hurricanes are pummeling coastlines. Forests are burning at unprecedented rates around the world — from worsening fire seasons as well as intentional destruction in the name of growth. Islands are sinking. Populations are losing their homes and their livelihoods. People are dying. Transitioning to a carbon-neutral society isn’t just some lofty goal for corporations to tout to ESG investors — it is imperative for our survival on this planet. And yet – according to a joint report by the Global Forest Coalition, Corporate Accountability and Friends of the Earth International – net zero has been co-opted by some of the worst polluters out there. As such, these initiatives act as public relations stunts for corporations while failing to deliver legitimate reductions in carbon emissions and all the while preventing any actual accountability.

“The ‘net-zero’ political agenda continues to be manipulated by Big Polluters across sectors. They are advancing an illusion of climate action that in reality masks the intention to continue to pollute, locking us into decades of climate catastrophe,” as the report — aptly titled Conflicted Beyond Credibility — begins. The analysis focuses on what the authors refer to as “three of the most prominent net zero initiatives,” Race to Zero, the High-Level Expert Group on the NetZero Emissions Commitments of Non-State Entities (HLEG) and the Integrity Council for the Voluntary Carbon Market. What they found goes a long way toward explaining the lack of real progress toward controlling emissions: The three groups have boards and expert panels made up of fossil fuel industry insiders.

HLEG’s board is rife with industry insiders and executives while Race to Zero is essentially an alliance of fossil fuel financiers. The Integrity Council’s board includes not only representatives of major financiers, but the Chair is a Senior Counsel whose firm represents the fossil fuel industry directly. It’s no surprise then that, in the words of the report’s authors, “all of these initiatives have major loopholes that fail to hold Big Polluters and Global North countries accountable for the action needed in order to avoid environmental and societal collapse.”

The authors of Conflicted Beyond Credibility are quick to point out that the strategies used by these initiatives allow polluters to essentially write their own rules and avoid the consequences of their continued inaction. They’re doing so largely through the promotion of going all-in on carbon trading markets. And while these markets might look good on paper — allowing corporations to claim their emissions will reach net zero — in reality they do nothing to reduce the amount of greenhouse gasses in the atmosphere. Instead, polluters can continue to do business as usual under the guise that their imaginary offsets in the ocean or the forests are cleaning up their mess.

But that mess isn’t going anywhere. The natural world is not a giant sink. As Indigenous leaders from Global Alliance recently have pointed out, “we cannot plant trees to escape climate disaster.” The planet doesn’t have time to wait on carbon trading games.

Rather, as U.N. secretary general António Guterres put during yesterday’s launch of COP27: “We are in the fight of our lives and we are losing … And our planet is fast approaching tipping points that will make climate chaos irreversible.” He called for lowering greenhouse gas emissions through clean energy and technology — citing the closing window of opportunity to make drastic change. “We are on a highway to climate hell with our foot on the accelerator.”

But allowing an industry bent on profit at any expense to police itself will not stomp the brakes at the rate at which the world needs, and it will not bring us back from the brink. Net zero is meaningless if it is achieved only in a carbon trading ledger. Climate experts have been more than clear — emissions must cease.

Image credit: Marek Piwnicki via Unsplash

Tires have been part of our world in one form or another for over 700 years, transporting carriages in the Renaissance era to electric cars, today. 

In the beginning, tires were simply a curved piece of wood. Leather was eventually added to make the ride softer. Over time, leather was replaced by rubber. It wasn’t until the late 1840s when Robert William Thomson, a Scottish inventor, patented the first air-filled tire. And it took another 100 years for radial tires — what we use today — to hit the road. 

Over time, as the only point of contact between a vehicle and the road surface, tires have evolved to make getting from point A to point B more comfortable, safer and more efficient. Today the tire industry is still looking at ways to improve tires, including how to optimize safety, performance, and make them smarter and more sustainable. 

Among the industry’s focus areas are tire and road wear particles (TRWP), which are tiny debris formed during normal driving conditions due to the unavoidable friction between the tire and the road surface. Such friction ensures sufficient grip of the vehicle on the road that is critical for safety. TRWPs are super-tiny, elongated particles — in the range of 100μm, which is around the thickness of a human hair— and are comprised of both tire tread and road pavement material in approximately equal measures. While the size of the particles is relatively small, given that more than 1 billion vehicles travel the roads each year, it is important to understand their potential impact on human health and the environment. 

A two-part study commissioned by the European Tyre and Rubber Manufacturers Association (ETRMA) and published in 2019, which analyzed how TRWP are transported through air, soil and water within the Seine watershed around Paris, provides some insight. According to models and environmental sampling, about 18 percent of the TRWP released within the watershed is eventually transported to local freshwater systems, and about 2 percent makes its way into the Seine’s estuary. Beyond waterways, low levels of tire and road wear particles have been found in airborne particulate matter in high-traffic locations in Europe, Japan and the U.S. To date, toxicity studies of airborne TRWP — sponsored by the Tire Industry Project (TIP), a voluntary CEO-led sustainability collaboration under the umbrella of the World Business Council for Sustainable Development — have found that human health risk related to short-term cardiopulmonary effects is low, although the authors note that additional research is needed to understand risk from longer-term exposure. 

European tire manufacturers address the release of tire and road wear particles in the EU legislative context

Many factors can impact the generation of tire and road wear particles — including driving behavior and vehicle characteristics like weight, distribution of load and location of driving wheels, as well as the type of road surface. Even things like weather and tire design can have an effect. That means effective mitigation requires a collaborative, multi-stakeholder approach. 

And that is where the European TRWP Platform comes in, initiated by the European Tyre and Rubber Manufacturers’ Association (ETRMA) together with CSR Europe in 2018. It is a multi-stakeholder initiative with experts from governments, academia, non-governmental organizations, and the private sector including the road and pavement, auto, tire and waste-water treatment, industries participating. “Through an open and inclusive dialogue, the Platform aims to share scientific knowledge, achieve a common understanding of the possible effects of particles generated during normal tire use and wear, and co-design mitigation options to reduce TRWPs in the environment,” says Fazilet Cinaralp, Secretary General of ETRMA.

In parallel, in 2018 the European tire industry began working on the important and unprecedented development of a representative and reproducible test method to determine the abrasion rate of tires, which could be used for regulatory purposes. ETRMA also advocates for more research and efforts to improve the composition of road pavements to decrease tire and road wear while maintaining safety. “The tire industry has been supporting research into TRWP for more than a decade; we’ve contributed a lot to the global state of knowledge, but it’s a complex topic with knowledge gaps that still need to be filled,” Cinaralp adds.

 “I would definitely say that today our main goal is to identify feasible and effective combined actions to mitigate the release and transportation of TRWPs. Looking at the future, we are about to receive a State of Knowledge study, conducted by two leading research institutes to map the existing best mitigation actions, proposing the most efficient solution for each given situation. This study should help support, with scientific evidence, the best mitigation actions we can all implement to limit TRWPs in the environment,” she tells us.

The way forward

“ETRMA’s initiative to bring different sectors together to investigate and tackle the issue of tire and road wear particles (TRWP) is a perfect example of what the Leadership Model looks like in practice. It starts with  a deep understanding of the responsibility of the industry but also about the limits of what it can do by itself. [TRWP] is not an issue concerning the tire industry alone, but it is now part of a wider agenda that deserves a wide array of action-oriented solutions by various industries and policymakers, including at the local — e.g., city and/or regional — level,” says Stefan Crets, executive director of CSR Europe. “This is a core element for the new agenda of the European TRWP Platform.”

The important role of the European TRWP Platform in involving different stakeholders and promoting constructive dialogues has also been recognized by the European Commission, which said that “the Platform will continue to play an even more important role in the work to reduce microplastics releases in the environment.”

This article series is sponsored by the Tire Industry Project. Members of the Tire Industry Project (in alphabetical order) are Bridgestone, Continental, Goodyear, Hankook, Kumho Tire, Michelin, Pirelli, Sumitomo Rubber, Toyo Tires, and Yokohama Rubber. 

Image credit: KingWalshy/Unsplash 

Here’s the introductory ESG guide you’ve been looking for. We’re keeping things simple in hopes that by the time you’ve finished reading this, you’ll better understand the basics of the ever-changing ESG landscape.

What is ESG?

ESG refers to the environmental, social, and governance factors that investors measure when analyzing a company's sustainability efforts from a holistic view.

Many companies publish ESG reports in alignment with ESG reporting frameworks, standards, regulations, or investor expectations to demonstrate transparency and disclose the environmental, social, and governance factors that contribute to the overall risks and opportunities involved with a company’s operations.

ESG reporting requirements can vary by jurisdiction and industry, and they are still evolving. What ESG information is most relevant for any company to report is based on their operations, management, and stakeholders’ expectations.

ESG data includes more than just each company’s individual impact. It also includes partners, community impact, and companies in their supply chain. The types of data included can vary from greenhouse gas emissions to labor practices, workforce diversity, executive compensation, and more.

Confused yet? Don’t worry, we’re going to break all of this down for you.

Environmental

The “E” in ESG means the environmental responsibility companies have, including energy use and how they manage their environmental impacts as stewards of the planet. Some examples of environmental issues are:

• Carbon emissions
• Energy consumption
• Climate change effects
• Pollution
• Waste disposal
• Renewable energy
• Resource depletion
• Social

The data disclosed in the social responsibility portion of ESG covers a wide range of topics from how companies are fostering people and culture to diversity statistics and community impact. Some examples of social topics are:

• Discrimination
• Diversity
• Human rights
• Community relations
• Governance

Governance in ESG covers how companies are directed and controlled—and how leaders are held accountable. Increased transparency into corporate governance is quickly becoming an expectation. Some example topics related to governance include:

• Executive compensation
• Shareholder rights
• Takeover defense
• Staggered boards
• Independent directors
• Board elections
• Political contributions
• Your ESG Strategy Checklist

Unsure how to develop your ESG strategy? Here’s where to begin:

1. Identify ESG stakeholders, and build your team

Once you have determined the internal and external stakeholders whom you serve, it's time to tap into your company network and build a team of self-motivated individuals who are eager to support your ESG program. Build a diverse, cross-functional team with expertise in different areas, like finance, human resources, internal audit, investor relations, and risk.

2. Research peers' ESG reports

Download ESG reports to compare and determine what data peers are disclosing and which ESG frameworks they're using. Based on this research, engage your ESG stakeholders to brainstorm which metrics are important to your organization, identify what ESG data you're already collecting, and determine the data you still need.

3. Determine ESG materiality and build your ESG reporting roadmap

Use information gathered from stakeholders to refine the metrics and values that matter to your organization. Then map the journey to achieving your goals for ESG reporting and ESG performance overall.

Why is ESG so complicated?

Global and industry ESG reporting standards are rapidly changing — and the regulations, frameworks, and standards don’t all align on the information they request from a company, whether it’s about the supply chain, ESG goals, or performance. This has led many companies to disclose only what they’re required to, or to use ESG frameworks that make the most sense for their stakeholders.

ESG rating agencies and rankers use different criteria and methods to determine ESG scores. Many companies haven’t been collecting ESG data or do not have structures or a team in place to put a complete ESG report together. Working across departments to compile, analyze, and report financial and non-financial data for ESG disclosures isn't always easy — this is where ESG frameworks and ESG reporting software and platforms come into play.

What data is used for ESG reporting?

ESG data includes environmental, social, and governance data from a business and its value chain, which includes customers and suppliers. The types of ESG data that a business can disclose can be vast.

On the environmental side, it can range from greenhouse gas emissions to water and raw material usage or even waste management.
Social ESG data can include statistics on company diversity, human rights, animal rights, and even information related to labor practices in the company's supply chain.

ESG disclosures around governance provide transparency into company leadership and operations. Investors are often looking for details on company values, employee relations, and corruption concerns as well as employee and executive compensation.
What metrics are used to determine ESG scores?

Most ESG rating agencies and rankers determine companies’ ESG scores through proprietary evaluation processes that provide limited transparency. ESG metrics aligned to frameworks and standards generally inform these scores, but raters and rankers also may include media trends, controversy analysis, and other public information. ESG metrics serve as a baseline for ESG reporting consistency and provide guidance for companies starting their ESG journey.

Many companies use ESG reporting frameworks to generate consistent reports that address the standardized ESG metrics for their industry. The purpose of ESG metrics is to create consistent, comparable reporting and drive companies to reduce their impact on the environment, improve their social influence, and provide more clarity on their internal governance.

What is ESG reporting?

ESG reporting involves disclosing information about a company’s operations and risks in three areas: environmental stewardship, social responsibility, and corporate governance.

Investors can use ESG reports to identify which companies to invest in with less financial risk because of their environmental impact, social standards, or governance structure. ESG reports help investors avoid companies that may be impacted by more strict ESG metrics in the future or other risks related to ESG data included in their reports. This is called ESG investing and it’s driving companies to adjust their corporate ESG strategies to focus on providing more information and transparency in their ESG disclosures.

Why are ESG reports important?

Investors and providers of capital are increasingly using ESG reports as a factor in their decision-making process. ESG reports provide transparency for investors and allow them to make more informed business decisions. They also help businesses analyze and evaluate their impact on our world and make strides toward setting and achieving their ESG goals — all while realizing business value in the process.

ESG reports do more than encourage companies to disclose their impact on our world — they help hold companies accountable for their impact. Although ESG reports may not be mandatory for all companies, the corporate landscape is moving toward an expectation for companies to be transparent on their ESG impact.

What is ESG investing?

ESG investing is when investors prioritize and consider environmental, social and governance performance and metrics in their investment decision-making process. The pressure for companies to be more transparent and forthcoming on their ESG reports comes from modern investors and the push from the broader investment community.

Here are some results from a ESG Attitudes Survey Workiva commissioned in 2021:

• More than half (61 percent) of adults want to know their moral beliefs align with a company before investing
• More than half (64 percent) agree that ordinary investors should put pressures on companies to be more transparent
• A majority (68 percent) shared they want data they can trust

ESG requirements

For years, companies haven’t had many rules to follow for ESG reporting, though the U.S. Securities and Exchange Commission has for years told publicly traded companies to disclose financially material climate-related matters. As regulators around the world finalize ESG reporting requirements, a growing number of organizations have been aligning with ESG reporting frameworks and standards including the Global Reporting Initiative Standards, Sustainability Accounting Standards Board Standards, and recommendations of the Task Force on Climate-Related Financial Disclosures—or the GRI Standards, SASB Standards, and TCFD recommendations.

Among ESG reporting software providers, Workiva has embedded top frameworks into its platform so companies can map their ESG data to frameworks and standards as they create their annual ESG reports.

What is an ESG score?

ESG scores can be looked at as ESG risk indicators. They are generated based upon a company's performance across their numerous environmental, social, and governance metrics. Put simply, ESG scores are a numerical value to help simplify the ESG risk and performance rating of a company for comparative purposes.

These ESG scores are complicated though because score providers, ratings agencies, and rankers evaluate different criteria to determine scores. Some request information from companies via surveys or questionnaires, others review public disclosures, and some do a combination. ESG scores are important because they provide a baseline for evaluating a company’s ESG risk, but without broad and standardized reporting frameworks (and regulations to enforce accurate and complete reporting), ESG scores are only as accurate as the data that companies have chosen to disclose—or what can be found online.

Nevertheless, investors are using these scores to help evaluate where to direct their money in the absence of standardized disclosures.

ESG vs. sustainability

Sustainability and ESG often seem interchangeable, but this isn’t the case. The meaning of sustainability can be broad but is generally focused on protecting the planet and people. ESG is focused on the material issues—emissions, water use, diversity, equity, and inclusion—that pose imminent financial risks to a company because of its industry, business practices and operations.

ESG frameworks and standards

A number of ESG frameworks and standards exist to help create comparable disclosure. They also help companies determine how to report and how to measure. A single company can use multiple frameworks or customize their reports to share their most relevant ESG data. It is recommended to look at which ESG frameworks similar companies within your industry are using, in addition to engaging stakeholders on their disclosure needs and start from there.

Dive deeper into ESG

We’ve barely scratched the surface of ESG and ESG reporting, but we hope you’ve learned something new in this guide. If you’re looking for more ESG goodness, we’re always publishing new and timely pieces on our ESG content hub, and check out the ESG Talk podcast with host Mandi McReynolds for the latest ESG trends, topics, and tips.

Originally published by Workiva and in the 3BL Media newsroom.

Image credit: Bela Geletneky via Pixabay

Between the dismal results of the 26th annual United Nations Climate Change Conference’s (COP26) call for more meaningful commitments to reducing carbon outputs and the complete incineration of all hope for limiting global temperatures to 1.5C, it’s becoming painfully evident that world leaders are either unable or unwilling to do what needs to be done in order to maintain the habitability of the planet. In response to this continued failure, the Global Alliance of Territorial Communities has released a statement ahead of COP27 calling for the immediate return to Indigenous and local community stewardship — including legal protections and adequate funding to preserve the planet’s forests and other vital ecosystems.

Global Alliance represents five major organizations that cover 24 countries with a joint population of 35 million spread across Africa, Asia and Latin America. The political platform’s goal is to create a united front from which to protect the planet’s forests and “defend Mother Earth for all humanity’s present and future benefit.” Their statement opened with an acknowledgment that governing bodies within the United Nations have finally begun to recognize the importance of Indigenous people in protecting the natural world, then continued:

“But the planet and its peoples are in crisis, and pretty words are far from enough. We are here to demand specific action to protect our rights as the only path to protect ecosystems that are urgently needed to combat climate change, biodiversity loss and the emergence of future pandemics.”

That crisis is no longer up for debate either — despite what remaining climate deniers may say. In fact, the U.N.’s latest report, Emissions Gap Report 2022: The Closing Window, doesn’t leave any room for doubts as to just how bad it really is. If anything the subtitle says everything world leaders need to know: “Climate crisis calls for rapid transformation of societies.”

The report – which compared the difference between total pledges to cut carbon emissions by 2030 with the amount of reduction needed to keep global temperature increases at 1.5C – concluded in no uncertain terms that humanity will fail to meet the target. Rather, even if all current pledges are kept, global temperatures will still increase by 2.5C — leading to cataclysmic climate repercussions. The only way to prevent this outcome is through an immediate change to the very basis of how business is done, focusing on degrowth in the Global North and worldwide decarbonization.

Furthermore, as Global Alliance’s statement points out — not only are many of the promises hollow, but some, such as global carbon markets, are actively harmful to “.. our peoples and the biodiverse forests they protect across the globe.”

Noting a recent report by the University of Melbourne – which estimates that 1.2 billion hectares of land will be needed to meet the pledges made by member nations – the Alliance continued, “Their dangerous overreliance on land-based methods to capture carbon would gobble up much of our ancestral lands, which we desperately need for food production and nature protection. Simply put, we cannot plant trees to escape climate disaster, there is not enough land. Instead, we need to protect and restore existing forests, and you can only do that with us.”

Yet, Indigenous and local activists face both physical and carceral danger. Land defenders, as they are known, are killed at a rate of one every two days. Most are Indigenous and there are likely many who are not included in the official count. Global Alliance estimates that “While our governments negotiate at the COP in Sharm el Sheik, an estimated 14 Indigenous defenders will be murdered for protecting Mother Earth.”

Although the U.N.’s Intergovernmental Panel on Climate Change (IPCC) has become a big supporter of land tenure for Indigenous and local communities — acknowledging the effect that it has on sustainable practices — little has been done to bring about actual change.

“Many researchers are calling on world leaders to give us more rights and support, but we are not seeing decision makers and politicians galvanize around such promising findings. This is our call to action too,” Global Alliance stated. “The evidence suggests that the future of all humanity is at stake, every day we are closer to the tipping point. We stand on this precipice knowing that at least 30 percent of the global plan for addressing climate change depends on us preventing the destruction of ecosystems, and we need to see this reflected in every national plan.”

Image credit: Global Alliance via Rachel Elkind — Facebook

While complex factors ranging from inflation to the Russian invasion of Ukraine have raised the cost of raw materials, companies in the food, energy, healthcare, and real estate sectors have raised prices far beyond covering their own increased costs, according to a new report analyzing corporate profits from Accountable.US.

The boost in prices of essential consumer goods have far outpaced the rising cost of production, as profit margins for U.S. companies have soared to their highest rates since 1950. The report found that top food, energy, healthcare and real estate management companies are continuing to raise prices for consumers, even though their profits surged by $6 billion from 2021 to 2022. 

Rising food costs aren’t anywhere near the rise of corporate profits

The 2022 Consumer Price Index showed that the costs of eating at home was over 13 percent higher in July 2022 than in July 2021, but the rising cost of food was only outpaced by rising corporate profits. Kraft Heinz raised prices twice in 2022 as its profit rose by 93 percent in the first half of fiscal year 2022. The food processing giant Archer Daniels Midland (AMD) saw a 63 percent increase in profits during the same time, largely due to rising prices from grain shortages associated with the war in Ukraine. General Mills, one of the largest consumer packaged food companies in the world, hiked prices five times during the past year while its net earnings increased by 46 percent. 

Increased food prices are hitting low-income households the hardest. Low-income households spend twice as large a percentage of their income on food as middle-income households, so skyrocketing food costs use up a larger portion of low-income households’ already limited discretionary spending. 

Soaring costs of fuel and electricity are hitting consumers hard

Energy prices rose nearly 33 percent from July 2021 to July 2022, and August electricity bills across the U.S. were almost 16 percent higher in 2022 than they were in August 2021. The war in Ukraine sent energy prices skyrocketing, and a summer with record-breaking heat prompted many U.S. consumers to use more energy to power their air conditioning systems. 

Electricity and power bills were made more expensive by sharp rises in consumer rates. Southern Company, a large Georgia-based utility, raised customer rates by as much as 12 percent, even as its profits rose by 41.8 percent. The country’s largest utility company, Florida Power & Light, increased its rates by as much as 20 percent in 2021; the company is currently defending its decision in front of the Florida Supreme Court. Nexterra Energy, Florida Power & Light’s parent company, reported $420 million in profit and spent $1.6 billion in shareholder dividends during the first half of Fiscal Year 2022.

Again, lower- and middle-income families are caught this rising spiral of corporate profits. In July 2022, one in six American families were behind on utility bills and risked their utilities being shut off, as the National Energy Assistance Directors’ Association concluded this summer.

Drug costs are also surging

While the Inflation Reduction Act includes several initiatives aimed at lowering prescription drug prices for Medicare recipients, the program is under a plan to be phased in over time. The report from Accountable.US noted that, “the largest U.S. drugmakers saw profits jump by over $6 billion to $36 billion while boosting shareholder handouts by over $5.2 billion to $24.5 billion in the first half of 2022.”

Executives themselves are making it clear that they are capitalizing on inflation fears, a trend that independent journalist Judd Legum has covered during much of 2022.

For example, in an August conference call, Michelle Peluso, the Chief Customer Officer of CVS Health, said, “for the most part, we're able to pass inflation through to our customers.” However, earnings reports show that CVS Health is passing on more than inflationary costs to customers: CVS profits spiked by another $259 million from 2021 to 2022, raising its total profits to $5.27 billion.

Rent keeps going up at a rapid place

In August, U.S. rent prices hit record highs for 17 months in a row, while the country’s biggest apartment companies witnessed their profit margins increase by nearly $296 billion. Shareholder dividends for the three largest apartment companies, Mid-America Apartments, Starwood Propertiest and AvalonBay Communities, ballooned from $33.9 million to almost $1 billion in Fiscal Year 2022. The national median rent reached $1,879 per month in July 2022, which is a 12.3 percent jump from the year prior. 

When does a price hike result in corporate profiteering? 

As concerns continue to grow that the U.S. is headed toward recession, the largest food, energy, healthcare, and real estate corporations are continuing to raise prices beyond the point of covering inflationary costs. For these top consumer-facing companies, shareholder dividends increased by $15.4 billion to reach a total of $62.6 billion from 2021 to 2022, even as the Fed is anticipating an uptick in unemployment. Bottom line, while American households will likely continue to struggle with the rising cost of living in the near future, record corporate profits result in more payouts to shareholders and executive compensation packages critics describe as excessive.

Image credit: Engin Akyurt via Unsplash

“Protecting people and the planet is at the heart of who we are.”  “Being a responsible corporate citizen is part of our DNA.”

Sound familiar? Probably if you’ve read a corporate environmental, social and governance (ESG) or sustainability report in the past decade. 

But what does it really mean for a business to integrate ESG into its operations? 

A handful of companies and executives are going beyond the buzzwords, attempting to truly merge ESG with their business and their business with ESG. One example is Mastercard. 

One of the world’s largest financial services companies operating in more than 80 countries, Mastercard prides itself on being a global pioneer in payment innovation and technology with a mission to connect and power an inclusive, digital economy that benefits everyone, everywhere. Pretty lofty aspirations. Lest they seem somewhat esoteric, Mastercard has set a quantifiable goal: to connect 1 billion people to the digital economy by 2025, including support for 50 million small- and medium-sized businesses and 25 million women entrepreneurs.

Shamina Singh has led the Mastercard Center for Inclusive Growth, the company’s philanthropic hub, since 2014, and her team helps carry out the company’s ESG strategy. She explained to TriplePundit recently how the company is working to operationalize ESG to achieve its broader mission — something she said requires solving for the root causes of financial exclusion and inequality.

Leveraging core assets to drive inclusive growth

That is where the Mastercard Center for Inclusive Growth comes into play. Its raison d'être is to advance equitable and sustainable economic growth and financial inclusion globally. 

As the Center explains, inclusive growth ensures the benefits of a growing economy extend to all segments of society. Unleashing people’s economic potential starts with connecting them to the vital networks that power the modern economy. Access to and integration into these networks increase people’s productivity and access to resources, which can set in motion a virtuous cycle of sustained poverty reduction and inclusive growth.

A key component of inclusive growth, according to the company, is financial inclusion — which refers to connecting people to secure ways of receiving, storing and managing money. While financial inclusion is a point of entry to lift people and markets out of poverty, inclusive growth is the key to move toward shared prosperity.

The Center harnesses Mastercard’s core assets and competencies in the form of data insights, capital, expertise, and technology to advance financial inclusion and inclusive growth. 

“In a world where we are under environmental and economic stress, companies must think of how they can apply their assets,” Singh told TriplePundit. “Their approach must be authentic to who they are, or it won’t be sustainable or impactful.”

Take for example Mastercard’s work in Egypt and Cambodia, where the Center is partnering with leading apparel brands and local financial institutions to digitize wages and savings for garment workers, about half of whom are women. Through the effort, Mastercard is sharing its own solutions and supporting training for previously unbanked workers to help them have a safe, secure, and digital means to receive wages and use their money, as well as the knowledge to leverage these new digital tools to improve their financial well-being. 

Mastercard is also working with the CEO Partnership for Economic Inclusion, first convened by Netherlands’ Queen Máxima in 2018 at the World Economic Forum, to identify ways the private sector can contribute to financial and economic inclusion.

“We are serious about working with partners to help them identify their assets — and how they can be leveraged to impact global challenges,” Singh said.

That is not to say the philanthropy isn’t important in Mastercard’s financial inclusion efforts; it is. What matters more is the opportunity to lever those efforts to drive a catalytic impact that sustains far beyond the giving. The Mastercard Impact Fund, administered by Singh’s team, has made more than $260 million in grants to 142 organizations in 89 countries focused on three areas:

• Increasing the financial security and economic mobility of individuals and workers
• Improving the financial resilience and growth of micro and small businesses
• Building capacity of nonprofits and governments to use data science to drive equitable outcomes

Mastercard initiatives have helped bring more than 675 million people into the digital economy since 2015, added 25 million micro and small businesses since 2020, and helped 18 million woman-owned or -led small businesses to digitalize. 

“Mastercard is driving innovation, serving our customers, and delivering value in a way that expands the middle class and helps the underserved with our goal of long-term financial security for all,” Singh continued. “We’ve recognized for a long time that Mastercard thrives when economies thrive. Economies are successful when growth is sustainable and inclusive and when prosperity is shared.”

The company’s strategy includes not only looking broadly outward, but internally and across demographic groups that have been disproportionately left behind. 

In 2020, as an extension of its 1 billion financial inclusion commitment, Mastercard announced its In Solidarity initiative to connect Black-owned businesses to products, services, technology, and financial support that will help close the racial wealth and opportunity gap. One key aspect: emphasizing inclusion in the company’s product development processes, such as those using artificial intelligence and machine learning, including helping to innovate data processes, such as with credit, to weed out bias. The company recently formalized this by expanding its data responsibility principles to “embrace diversity in all its forms to enable data practices, analytics and outputs that are inclusive, comprehensive and equitable.”

“Data connects us all, but we need to ensure that it reflects us all,” Singh added. “We have the responsibility and the opportunity to make sure we build our digital world to live up to its full, inclusive potential.” 

Taking shared accountability to the next level 

A number of companies have started to link executive compensation to ESG performance, such as apparel manufacturer Gildan, biopharma company Pfizer and coffee giant Starbucks. This year, Mastercard went a step further and became one of the few to extend the link to all employees globally. The company’s approach focuses on three of its ESG priorities: carbon neutrality, financial inclusion and gender pay parity. Beginning in 2022, achieving the company’s ESG goals now factors into compensation calculations for all Mastercard employees.

“While our global efforts go much broader and deeper, we’re tying compensation to emissions, financial inclusion and the gender pay gap because we have a substantial impact in these areas and because they closely align with our vision,” said Mastercard CEO Michael Miebach in a message to employees.

In connection with the announcement, Mastercard developed learning materials for employees to help educate its workforce on ESG, the key components of the company’s strategy, and how they can take action through their own efforts.

“We have been focused on ESG for many years, with our first financial inclusion goals 10 years ago and our sustainability strategy five years ago. Linking this to compensation was a natural evolution,” Singh said. 

As Mastercard has modeled, when ESG initiatives become more than words — when the vision for a better world is implemented as the driving purpose of the company — true progress, with sustained impact, is possible. 

This article series is sponsored by Mastercard and produced by the TriplePundit editorial team.

Image courtesy of Mastercard

It wasn’t long ago that press releases announcing bold net-zero commitments were flying into editors’ email boxes. At times, it seemed like Deal or No Deal on Red Bull. We’ll be net-zero by 2050! Wait, no, 2040! We’re going for 2030!

But when one realizes that no one is trying to stand out by announcing a net-zero commitment by 2029, or is frank enough to admit a zero-emissions operation won’t become any company’s reality until 2031 or 2032, something is up.

Well, something is up. The problem many companies had is that their net-zero commitments have been rather John Kerry-esque, promising a zero-emissions future in part by relying on technologies that don't exist yet. Meanwhile, also like Kerry, we can expect companies and their comms departments to remind us that will have “already achieved success” while saying that “time is running short.”

The problem starts with the very branding of what “net-zero” actually means. To be fair, as a recent report from Accenture concluded, setting any sort of emissions target can help make a difference as the world attempts to avoid climate catastrophe later this century. Nevertheless, the same report concluded that more than 90 percent of the companies that have set net-zero goals are on course to fall short of those targets. It doesn’t take a lot of math to sort out that all those net-zero commitments are adding up — or shall we say, subtracting down — to something far from zero.

At a time when we keep hearing that “government can’t do it alone, the private sector needs to step in,” only a third of the world’s 2,000 largest companies by revenue have set any sort of zero-emissions goal for 2050.

At a time when the public increasingly distrusts institutions such as government — take a look at what is occurring in exhibits A and B, as in the U.S. and U.K. — setting ambitious targets only to fall short isn’t a way to win the trust of consumers. That’s particularly true of the millennial and Gen Z generations, which expect more from companies than simply ensuring that Wall Street is happy with their quarterly financials.

Outside factors could come into play, including next week’s U.S. midterm elections; the fact there won’t be a general election in the U.K. until early 2025, causing more angst within the nation; and countries across Europe continue to shift toward radical, right-wing politicians. Considering this, there could be far less of an appetite toward solving climate change as people demand a focus on inflation and other perceived problems such as immigration.

Getting back to Accenture’s report: While companies have a lot of catching up to do in order to meet their net-zero goals, the consultancy’s assessment offers some rays of optimism. Certainly, adhering to a zero-emissions framework can help — for example, companies that align with the Science-Based Targets initiative (SBTi). As the cliché goes, it’s a marathon, not a sprint. First-time marathoners need to establish a clear set of running goals and achieve a certain distance weekend after weekend. If they think they can run those 26.2 miles on the day of the race, it’ll be over by the fifth or maybe the 10th mile. The same can be said of companies’ emissions targets. The time to stop talking and announcing, and start doing, or stop emitting, was yesterday.

Further, the sheer numbers that are behind climate action are encouraging, but remember, they are numbers behind commitments, not actual spend and action. For example, more than 90 percent of global GDP is covered by net-zero commitments; the private sector worldwide has committed more than $130 trillion to such programs that seek to tackle climate change; and plans that are in tandem with the Task Force on Climate-related Financial Disclosures (TCFD) have increased four-fold since 2018.

But in the end, these are promises and commitments. They have not added up to accomplishments quite yet. To put it into layperson’s terms, rent is due. The earth is our landlord, and companies have been getting a free ride for decades. Promises to make it all better won’t change the fact that so far 2050, and even 2030, are proving to be years most of us aren’t looking forward to.

Image credit: Andreas via Pixabay