Leadership commitment is critical for boosting ESG performance

ESG has been popularized by leading companies that see sustainability as a way to generate both social and economic value.

Do Better Team

Article by Fundación SERES.

Business today cannot be understood without the dominant acronym of the last decade: ESG (environmental, social, and governance). Driven by factors such as interest by the financial community, regulatory pressure, social demand, and changing employee expectations, ESG criteria have emerged as key indicators of companies’ sustainability and long-term viability. 

Talk about responsible businesses, companies that take stands on social and environmental challenges, organizations that work to link economic and social progress, is increasingly common. Arguably, ESG is mainstream today at least in part because of leading companies that see sustainability as a way to generate both social and economic value, trailblazers that serve as an inspiration to make this way of doing business the only way possible.  

Integrating ESG factors into business strategy is an investment in long-term success and an opportunity to better connect with all stakeholders. Companies that take this approach are better prepared to face challenges and anticipate change, position themselves as change agents and industry leaders, attract and retain the best talent, earn the trust and loyalty of consumers, strengthen their reputation, improve the well-being of people and the communities they operate in, and gain a competitive advantage in an increasingly aware market. 

Transforming the business reality requires each and every one of us to do our part. But the responsibility to move ESG issues from the periphery to the core of a company’s strategy and performance falls to its leadership. Leaders have an extremely important role to play in turning corporate social commitment into opportunities within the company. They are a driving force for companies to embrace new models, to become more committed organizations that include social issues in their business strategy and care about their impact. After all, it is the leaders who define the corporate culture, set the organization’s standards, make strategic decisions, and have the ability to galvanize and empower employees and spread their vision to the rest of the organization.  

It falls to an organization’s leaders to make ESG factors part of its core strategy

Over the last three years, the SERES Foundation has created a network of committed leaders, LíderesResponsables, who inspire and drive change at their organizations. The network brings together around 80 executives from leading Spanish companies to discuss the role of business and senior management in a fair social and economic reconstruction that leaves no one behind.  

What types of leadership do we need? 

For Inés Bermejo, general manager of HP Iberia, leaders today have to play an active, unifying and engaged role that fosters the creation of sustainable ecosystems and involves everyone in a common goal. They have to recognize that their decisions can have a significant impact on teams, customers, suppliers, and society. They must be leaders who value and prioritize sustainability management and are able to adapt it to the business, even in highly competitive environments. The key is to be a responsible leader who inspires and motivates everyone everywhere.  

Responsible leadership is leadership that is authentic, inclusive, coherent, and, above all, transformative. Responsible leaders are able to generate a strategic vision based on ESG, a vision capable of creating economic, social, and environmental value all at once. They are capable of using their most distinctive assets, their skills and innovation, to develop products or services that respond well to the challenges that lie ahead. It is also leadership that pays close attention to transparency and accountability and is willing and ready to establish a culture of integrity and accountability, leadership that is capable of both transforming the company internally and generating external transformations.  

ESG leadership must be inclusive and collaborative

At a session of the Esade–SERES Foundation lecture series, the CEO of NTT Data Spain, Sergi Biosca, expressed his conviction that no value equation can succeed that does not include sustainability. Beyond profitability or return, a new value proposition has emerged that matters to professionals, customers, investors, and regulators alike: to make a positive impact on people and the planet. Companies are made up of people and make an impact on them. And we all want to feel like we are part of a company that is engaged and does the right thing

We talk about conviction, coherence, listening, example, and inspiration. But this type of leadership must also be inclusive and collaborative. Leaders must be able to foster collaboration and diverse perspectives, recognizing that sustainability is not just the responsibility of a single department or individual, but of the entire organization. 

Measuring and communicating ESG performance: keys to responsible leadership 

According to Asun Soriano, CEO of ATREVIA Spain, ESG factors are already on the senior-management agenda of many companies, pointing to an extraordinary paradigm shift. Often, this is a matter of vocation, as companies are both economic and social actors; in other cases, it is out of obligation or due to regulatory or reputational pressure. However, all are moving forward and there is no turning back.  

The next few years will be critical to managing companies under strategies that focus on ESG factors, especially social impact. Measuring and communicating this impact will be crucial. Methodologies such as the SERES Foundation’s SERES Social® Footprint Map are being launched as part of this effort to measure and support the importance of social factors. This methodology measures the social impact of economic projects to provide a vision of the social impact of a company’s economic activity on its employees, its customers, its suppliers, and the communities in which it operates and offer higher standards of economic and social connection. 

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