Where’s the GBC in ESG?
All industries have their jargon and the world of responsible and purpose-driven business is no exception. Some speak of ESG, others focus more on social value, then there is sustainability as a more generic term and what about the UN SDGs. How does it all fit in and where would we position the Good Business Charter?
I hope to explore this and show why the GBC is as easy as ABC.
What is ESG?
ESG stands for Environmental, Social and Governance and refers to a set of standards for a company’s operations that socially conscious investors use to screen potential investments.
It was introduced by the United Nations in 2005 and has grown to be a globally recognised way of measuring how a business is behaving responsibly.
Environmental criteria look at how the company is being a good steward of nature, including energy usage, waste disposal and environmental impact.
Social criteria cover the different relationships with employees, suppliers, customers and the communities where it operates. This includes diversity and inclusion as well as labour relations.
Finally, governance deals with a company’s leadership, executive pay and the internal systems to ensure a company is compliant with the law.
ESG in practice
I wonder how many business owners are scratching their heads and wondering quite what ESG means for them. The Good Business Charter has a solution that helps organisations of all shapes and sizes move forwards in these important principles – which can also be expressed as caring for people and planet alongside profit, or the triple bottom line.
The GBC in ESG
People talk about mapping the components of the GBC onto different principles. One such suggestion is around the United Nations Sustainable Development Goals. These 17 goals are laudable and common, global currency in the world of international development. I am hesitant about forcing a mapping between a UK accreditation scheme and international Sustainable Development Goals, but for completeness I have made an attempt below!
However, when it comes to ESG, there are some clear overlaps which reinforces the members of the GBC’s standing/commitment.
E – well one of our 10 components is environmental responsibility which encapsulates all areas of how you approach your impact on the environment alongside your commitment to net zero by 2050.
S – 5 of our 10 components protect employees with fair pay, fair hours, appropriate care for their wellbeing, a voice in the workplace and diversity and inclusion celebrated. Alongside that is a commitment to customers as well as ethical sourcing and prompt payment to suppliers.
G – we specifically require companies to commit to paying their fair share of UK taxes and within the diversity and inclusion component we include the requirement to report CEO pay ratio. Background checks ahead of accreditation also ensure a company is appropriately registered and up-to-date with reporting requirements.
Are there additional areas we could cover? No doubt there are. We strongly hold to the belief that the Good Business Charter will evolve from within as members talk to one another and together strengthen relevant components and push one another to a higher standard. We are excited to see how that process develops over time.
Why the GBC is as easy as ABC
So, if you work in an organisation which thinks they ought to be doing something around ESG but aren’t quite sure what that should be then why not start with the GBC?
We are as easy as ABC because we are:
A – accessible – a straightforward, online process to apply, free for the first year with nominal charges thereafter, clearly understood with a need to be working towards all 10 components and open to all organisations (public, private and third sector) of all sizes, including the self-employed.
B – business led – this is a Charter that has come primarily from the business world. It has been designed by Julian Richer, who has employed these techniques in his own businesses and those he has advised over decades, and brought in the expertise and support of the CBI which represents hundreds of thousands of businesses.
C – caring capitalism – another word bandied around in the current climate of building back better, but one that says what it does on the tin, just like the Good Business Charter does. This is a capitalism that cares – yes, businesses make profits, but that should not be at the expense of people and planet. Let’s treat everyone as the humans they are and show we care.
So start your ESG journey today! Join the GBC – after all, it really is as easy as ABC!
My attempt to show how the GBC helps contribute to the SDGs:
Real living wage – SDGs 1-4 – many people in UK poverty are in-work but on a low wage – this does not only bring poverty (SDG1) and hunger (SD2) but impacts on good health and wellbeing (SDG3) and quality education (SDG4) as children in poverty go to school hungry.
Fairer hours – as above, contributing to SDGs 1-4.
Employee wellbeing – SDG3 – good health and wellbeing
Employee representation – SDG8 – when employees have a voice they can make suggestions and not only feel they have an opportunity to do decent work, but contribute more widely to economic growth.
Diversity and inclusion – SDG5 and SDG10 – gender pay gap reporting is a part of the Good Business Charter and the commitment to reduce inequality along lines of gender, race and disability.
Environmental responsibility – SDG7 and SDGs 12-15 – as we seek to reduce our impact on the environment we will contribute to clean energy, responsible consumption and production, climate action and the knock on effect for life below water and life on land.
Pay fair tax – SDG9 and SDG11- when companies pay their fair share of tax, they give their government increased income to put into industry, innovation and infrastructure and look to build sustainable cities and communities. It also contributes to SDG16 as a sense of justice.
Commitment to customers – SDG17 – customers want to purchase from ethical organisations and give to ethical charities. As they reward GBC members with their business thanks to feeling valued by them, they partner with the GBC community to meet the SDGs.
Ethical sourcing – SDGs 1-11 – GBC members commit to the ETI base code which covers safe and hygienic working conditions, living wages and no discrimination, all of which, especially when sourcing from developing countries, can have an impact on the SDGs.
Prompt payment to suppliers – SDG16 – it is only fair and just to pay suppliers on time and contribute to their place in the economy, ensuring their economic growth (SDG8).