ESG, a new deal between business and society
Glimpse, another perspective on business
A SKEMA Business School magazine for professionals
No.1, January 2024
The acronym ESG (Environmental, Social and Governance) is gaining prominence in the media in response to the climate emergency. For more than 20 years, preserving the environment has been a crucial global issue for ensuring the sustainability of the planet and human living conditions. To encourage action, scientific data and IPCC reports need to be supported by a narrative. While politicians play an essential role in raising awareness of environmental issues and guiding public policy, businesses are responsible for "changing the game". As well as preserving the environment, social concerns and governance are also becoming important.
Companies are taking a proactive approach to ESG challenges, but there is still a gap between awareness, commitment and effective action. ESG approaches require time, training and adjustments to eliminate negative externalities and achieve carbon neutrality.
Through the testimonies of 9 international companies, this challenge highlights that organisations are striving to become sustainable by making carbon neutrality a priority. However, they also aspire to become 'contributing companies' with a wider positive impact, which implies a review of business models. ESG thus becomes a virtuous process aimed at transforming companies into regenerative organisms in harmony with nature. Although this takes time, it is a collective objective that gives new meaning to companies in the midst of change. Against a backdrop of growing geopolitical challenges, it is encouraging to see companies making a commitment to ESG.
Enjoy your read!
Pascale Viala, Vice-Dean and Director of the Corporate Office, SKEMA Business School
Fabien Seraidarian, Director of Knowledge Transfer and of SKEMA Global Executive MBA, SKEMA Business School
Read Glimpse no.1 "ESG, a new deal between business and society"
What are the key issues?
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The need to act in the face of the climate emergency is indisputable. However, despite this, ESG (Environmental, Social and Governance) criteria are still in their infancy, as there is still a long way to go before every company fully understands the challenges they face. What strategies, organizational structures and practices should we adopt? By analyzing the actions undertaken, we can distinguish three different approaches, reflecting the particularities of each sector and organizational culture, rather than simple ideal models.
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ESG practices vary according to different rationales. A strategic approach makes it a top management priority, while innovation aims to eliminate negative externalities. A social focus encourages a culture of responsibility. Finance demands proof of sustainability for positive ratings. Regulation is crucial for clear standards and fair competition. Companies must value sustainable investments.
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Regulation is pushing companies to change. This creates new standards and objectives, transforming the roles of stakeholders. Companies are moving from resistance to change to profound transformation, aiming for more sustainable or regenerative models. Each company must find its own way through this transition.