The core aim of any business is the healthy pursuit of profit.
Seasoned capitalists may agree that the pursuit of profit is necessary to fuel economic growth and contribute to the development of all our futures, even if in reality, your first port of call is to ensure you meet the needs of your key stakeholders.
But the role of capitalism in modern society has been held up to the light. The very reason why your business exists is being scrutinised by your customer/client markets, current and future workforces, and supply chains, as they all look for evidence of how you are achieving positive environmental impact, social and inclusive value, and demonstrable ethical governance.
For the staunch capitalist, ESG was once regarded as a fad, a passing idea from the left. Yet it is clear that ESG is mainstream, is here to stay, and will only grow in capital input and importance.
Indeed, according to a PWC Report in Oct 2022, asset managers globally are expected to increase their ESG-related assets under management to US$33.9tn by 2026, up from US$18.4tn in 2021. A recent survey by Grant Thornton with UK SME lenders stated that 93% expect ESG related lending in the mid-market to increase in the next few years.
But as someone who has spent the past 20 years helping profit-driven organisations to do more for society, I see the irony in that it is the same staunch capitalists who have, as Wall Street liberal Robert Zevin put it, “found a way to repackage an idea, to make it profitable, and mass producible”.
Personally, I feel that ESG is just the next evolutionary step towards the blended nirvana of true Inclusive Capitalism. From charitable giving to corporate philanthropy to corporate social responsibility to ESG, the inclusive journey continues and long may it do so.
Whether business leaders want to accept it or not, the future growth of their organisations is found in their ability to embrace a new paradigm of what I would have coined as, Executive Social Leadership (ESL). This is the adoption of a more inclusive mindset that will enable leaders to integrate a deeper evidence-based approach of blending the positive disruption of ESG into the practical application of business leadership, in order to be competitive within a rapidly changing, sustainable and diverse world.
I believe that if leaders refrain from greenwashing, and genuinely strive to focus on a more evidence-based approach towards ESG strategy and practices, alongside the development of a more inclusive culture, they will unlock the commercial confidence they need to articulate their own business case for MORE investment into society.
But to move from a place of traditional capitalism to a place of inclusive ESG, leaders will need to underpin their activity with some core principles.
From my years of consulting and advising experience, here are four thoughts to kickstart your own approach:
- Secure strategic buy-in and accountability from key organisational decision-makers – seems obvious, but there must be a top-down approach to inclusive ESG that encourages trust, accountability and a keen sense of authentic leadership.
- Integrate beneficiary voices into organisational policy and best practice – in the main, historical procurement and social investment processes are not fit for the purposes required in a modern-day economy. It is vitally important that the beneficiaries of any proposed ESG support are given a fair opportunity, to include their own cultural intelligence within the design and shaping of solutions set out to serve their needs.
- Embrace the partnership engagement of smaller organisations who have access to grassroots networks and changemakers – this will help to ensure that ESG outcomes can be embedded in a more collaborative and sustainable manner, by those who will feel the impact of any outcomes first.
- Adopt data-driven solutions that can help to inform agile and innovative thinking – inclusive innovation is often borne out of the nurturing of neuro-diversity. But the deployment of such innovations can be accelerated, by combining data evidence that underpins impact measurement models.
Using innovative technology to unlock a deeper understanding of the inclusive needs of your clients is what sits at the heart of our GFA Exchange solution, alongside deep expertise in the development of practical inclusive business programmes and support.
We believe that a more data-driven commitment to ESG will enable you to improve the value of capital and support for wider society, whilst providing the opportunity for positive capital and commercial returns.