Finding your ‘north star’ in responsible business for the New Year

How do we really know what a company is like? Often it is only when you work at it that the true nature of its priorities and culture become obvious – though other stakeholders may get a sense in their interactions with them.

Richer Sounds is well known as a company with an incredibly high level of retention – and no job vacancies. There is a reason for that – people who work there feel valued and enjoy what they do! Their customer accolades show that when people walk into the shop and interact with RS colleagues, they do sense this value for people – and other partners in their interactions feel it too.

Yet it is not just a general sense. Richer Sounds has a clear way of communicating what it believes in and its Founder, Julian Richer, has been vocal about his views on the importance of paying everyone a real living wage and ensuring they have security in their hours, for example.

Disclosure requirements

In a world where more ESG disclosure requirements are being created and increasing the reporting burden for companies, are we at risk of losing our clear, guiding principle on being sustainable? Are we moving to a world where companies report more than ever before, but are no longer pushing forwards on ESG agendas? Where we have plateaued in our efforts to improve?

I was recently told that the Corporate Sustainability Reporting Directive will add 200 pages to a company’s annual report – 200 pages!!! That represents an almost unfathomable amount of work to gather together all that data and ensure compliance. Yet outside of the benchmarking and reporting departments of big companies, what does that even mean to the rest of the workforce? Will it truly translate into concrete actions to improve practices and raise the bar on business behaviour? I fear true movement forwards on the agenda will be lost amid all the reporting.

In January 2023, Joe Kaeser at Siemens, wrote an article as part of the world economic forum, talking about the north star of ESG. Against a backdrop of criticism of ESG, he wrote:

 

‘ESG doesn’t need saving. It remains a clear ambition but it needs transparency. In an increasingly fragmented and volatile world, it is more important than ever for companies to have a clear compass. Having a “true north” is a prerequisite for sustainable management and for creating value for all stakeholders – and thus, for inclusive capitalism. Clearly defined and clearly communicated ESG goals can be this north star.’

When I read words like ‘clear’ and ‘transparency’ I am reminded that whilst the Good Business Charter may not be an in-depth audit of an organisation’s activities and approach to sustainability, it does provide an effective ‘north star’ in this space.

“There is beauty in its simplicity”

Liam Byrne MP, Chair of the Select Committee for Trade and Business, concurred.

Responsible business reports

Schroders Personal Wealth now produce a responsible business report each year, framed around the GBC’s components. I believe it meets that cry for clear definition and communication of ESG goals – explaining what they have done in the past year and what their plans are the year ahead. It is not just focused on historic compliance, nor is it simply vague intentions for the future. It is concrete and realistic. It is also easy to read and understand for lay people, not familiar with the technical world of sustainability. That means it can be read by their clients and by their colleagues, tapping into a hugely undervalued reality:

People want to work for responsible organisations and they want to do business with responsible organisations.

  • Almost half of younger workers (46%) want the company they work for to demonstrate a commitment to ESG, and 20% have turned down a job offer when the company’s ESG commitments were not in line with their values (KPMG, January 2023)
  • 97% of consumers think it is important for a business to act responsibly (TSB Consumer poll, June 2021)

People are also very busy and our attention spans are lower now than ever. Unless they are contemplating a significant investment, they do not want to wade through pages upon pages of annual reports nor plough through a company’s website trying to get a sense of the organisation. The great thing about a clear report communicated with colleagues is that those colleagues, who really know what it’s like to be in that organisation, can follow what is being said, and challenge it if inaccurate.

That is real transparency. It is honest and measurable ESG.

Kaeser summarises at the start of his article the following points:

  • Clearly defined and clearly communicated ESG goals can create value for all stakeholders and sustainable management practices.
  • For ESG to become a company’s “north star”, it should go beyond “E” and not solely focus on environmental targets.
  • It is also a leadership issue: there is no use if only top management knows about ESG goals.

A clear ‘north star’

Good Business Charter accreditation gives companies a ‘north star’ that goes well beyond the ‘E’ in ESG.  It is clearly defined and there is a requirement on accredited organisations to clearly communicate it. Compliance with the GBC will create value for stakeholders – very tangibly in the pay packets of low paid workers and lifting standards in the supply chain as well as paying suppliers on time.  These also lead to more sustainable practices with resilience in the supply chain and higher staff retention.

ESG goals often stay with top management because they either don’t think their workforce is interested or they are too technical to make much sense to those not trained in sustainability. Embedding the Good Business Charter in an organisation, making it part or your organisation’s email signature and ensuring everyone knows what it stands for and why the organisation sees it as important are easy wins to have that North Star visible to all and hold top management to account in decisions they may make.

I know for a fact an organisation with GBC accreditation will navigate the tricky decisions with real care as they are being held to account by their stakeholders. That means there are concrete actions and improved practice. If our 1,000+ GBC accredited organisations became 10,000+, all showcasing their commitments and targets in these areas, I am confident that there would be increased value for all stakeholders and wider society. Whilst everyone is head down in figuring out what disclosures are required for technical compliance with regulations, I have less confidence the UK workforce, suppliers and customers will see any improvement in their daily experience of capitalism.