This essay of our founder, Frederik Otto, was part of the TSBR September 2022 newsletter:
Dear TSBR Follower,
The last few weeks have seen an avalanche of scrutiny for one of the world's most infamous abbreviations: ESG.
It has become victim of the political divide in America, synonymous with liberal policy, a scapegoat for stagnant fund performance, and a special report in an influential newspaper. On the other spectrum are business leaders keen to monetise on the sustainability narrative as well as lawmakers eager to impose reporting regimes and oversight.
We urge to take one step back and not let the current negatively charged debate undo the progress that has been made over the last few years. That is, setting environmental and social concerns on top of the corporate agenda. We have advocated since 2019 to make sustainability, or ESG for that matter, strategy oversight part of the board's core purpose. This is in increasingly happening as our 2022 annual report will examine once again. It will be published in early Q4 2022.
Although there are different schools of thought how the board should setup ESG oversight, it is first and foremost a leadership issue before anything else. We believe that powerful leaders, such as CEOs and the board as fiduciaries, as well as shareholders, are responsible for a sustainable future.
Oversight should not be mistaken as a mere reporting exercise and only focus on risk mitigation, reduction of harm, and reducing negative externalities. That is of course a good start, but the world needs actual impact: doing good rather than doing less bad. Businesses need to pivot their strategies to solution for what the world and society needs. Some more so than others of course, but whatever it means in any leaders specific context, and whether you are managing or governing- a meaningful ESG/sustainability agenda requires courageous leadership.
We hope you enjoy our selection of short articles below that all examine the state of ESG and where 'the rubber meets the road'.
Frederik Otto
Founder
The Sustainability Board Report