If you are reading this, you probably already know and follow Matt Sekol. I’ve had the privilege of meeting Matt in person and hosted him as a webcast panelist before. Aside from our mutual obsession with Star Wars, we also share views of corporate ESG/sustainability. His newsletter theme yesterday was painfully true:
“It is tough to be an ESG Advocate at the moment. Frankly, if you intersect with any ESG topic, the news lately continually beats down our ambition… Headlines for every business issue have become a continual stream of ‘the sky is falling,’ with little details that empower anyone to be an armchair expert. As a result, the level to which companies are improving their ESG strategies … is missing from the narrative.”
But all is not lost. Matt (as we do here) emphasizes the importance of converting ESG matters, goals and activities into a defensible business case – i.e., materiality:
“Each company has a unique intersection with ESG topics that may or may not drive systemic approaches forward, but it has to be material. Only from that vantage can the company deliver impact if it chooses. After all, with immaterial efforts, as soon as underperformance creeps in, these programs are the first thing to go or be reworked…
On the other hand, a company that performs well and understands the material intersection of ESG topics with the business … can continue defending those programs.
Key point: Materiality and stakeholder considerations build defensibility.”
He concludes with practical thoughts:
“You’ve probably noticed that this is a pivot from saving the world and its people to saving the company, and you are likely disappointed. Don’t be. As I wrote in ESG Mindset, the path to impact runs through material change. Once a company understands and begins to address its material challenges, it can build a defense to other projects.
I encourage you not to despair and to channel your energy productively. Make your work material to find the impact in the long term.
For boards: Be careful which other boards you follow and what advisors you are listening to. Don’t lead your company’s strategy by what the headlines read because you might find yourself misaligned with reality. Your company may also be outpaced by sustainable innovations with a higher cost to catch up later.
For everyone: I advise researching and diving deeper into what’s happening, especially if someone else uses headline evidence to make a point. If you have a board member’s ear, actively listen but challenge and set the record straight. This is also good advice for challenging the media narrative and engaging on social media.
Lastly, remember that changing company policy based on political rhetoric rather than legislation and regulation means you ultimately concede control of how you run your business to others. This is the point of the anti-ESG crusade, and the door swings the other way, too. This alignment is one [with] considerable governance risk…”
ESG/sustainability leaders, staff and advisors – If you are indeed disappointed in his pivot, consider a perspective I have espoused for many years: for a company to sustainable and be an example for others, it has to succeed financially. If a company goes out of business, it can’t continue or expand its sustainability successes. Going broke merely furthers the myth that sustainability has no business value. And if you are looking for a resource that “challenges the media narrative”, we can help with that.
Members can read more about the business value of ESG/sustainability here.
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