Let’s talk ESG today. What is ESG, you ask? It represents the environmental, social, and governance information about a firm. In January 2023, at the World Economic Forum (WEF) Annual Meeting in Davos, Switzerland, global leaders from businesses, governments, and civil sectors met to discuss the priorities for the coming year.
Why does ESG matter to you as an MSP owner?
It matters to you as an owner because ESG matters to your stakeholders:
- Customers: Today’s customers want their values reflected in the brands they buy from. Building your reputation as a Purpose Driven Brand will give you a competitive advantage by differentiating you from your competitors and helping you gain new customers.
- Investors: ESG considerations have become a top priority on investors’ and corporates’ agendas. Investors are now pursuing ESG investing, or sustainable responsible investing (SRI), by using the ESG information about a company to inform their investment.
- Employees: Despite the recession, there is still a war for competent talent. Employees want to work for organizations that are socially responsible global corporate citizens. They check and research organizations before applying for positions.
- Partners: Larger organizations are putting ESG criteria into their governance policies and require their vendor partners to have ESG goals and reporting. The DoD is already reviewing the diversity of organizations when awarding new partner contracts.
At Davos 2023, the WEF, Bank of America, and the Big 4 accounting firms: McKinsey, KPMG, PwC, and Deloitte, presented the globally recognized Stakeholder Capitalism framework for organizations to use for their ESG reporting.
What are the four pillars of the Stakeholder Capitalism framework:
- Principles of Governance: This pillar includes practices that organizations increasingly need to embed in their policies, such as principles of agency, accountability, and stewardship.
- Planet: This pillar includes metrics and practices with the ambition to protect the plant from further degradation, including sustainable practices.
- People: This pillar focuses on the ambition to end poverty and hunger and that all human beings have the opportunity to fulfill their potential with dignity and equality.
- Prosperity: This pillar aims to ensure that all human beings can enjoy prosperous and fulfilling lives enabled by economic, social, and technological advancement.
While this may seem daunting, chances are you’re already doing things that would fit as an ESG metric, and you don’t even realize it. Look at the framework, and highlight for your stakeholders what you’re doing to be a socially responsible global corporate citizen.