Sustainability Depends on Understanding ESG

The politics of climate change seem to cloud (no pun intended) many discussions on ESG. We need to step away from the debate and look at what ESG means from an impact to the sustainability of our organizations. Once we do that we can more readily explain the value of being ESG conscientiousness to our clients, shareholders and members.

Efforts to address environmental risks support the sustainability of the organization but also the sustainability of many of our clients businesses. Agriculture is one quick example. There are many others. As seen recently with the heat waves ins the southern United States, the flooding in Yellowstone and southern Montana, winter in summer and summer in winter, the environment impacts all of us. And while actions taken by global or national organizations are newsworthy it may well be the actions taken by community banks and credit unions that ring more true to customers. Environmental risks and sustainability must be addressed at that level and companies that don’t address these risks are at risk themselves.

Social awareness is valuable to our organization and our customers. The ability to easily navigate the social media world, including protecting data, confirming facts, and gaining comfort in technology based relationships is value added for clients. That being said, equity in hiring, promotions and pay are becoming more prominent in boardroom discussions. Social issues are particularly important to younger generations. Organizations that want to ensure their longevity and to attract young clients must do more than embrace technology. They must demonstrate their commitment to those issues impacting society.

Good Governance practices enhances sustainability as well as risk management. Granted, governance practices are not always transparent to our clients or customers. Regulators and investors, though, do understand the value associated with good governance. Employees too recognize a well-run business and actively seek to work where management is committed to a sustainable product and business model. If regulators, investors and employees are comfortable with governance practices then clients, customers and member’s benefit and they too gain comfort. In today’s highly competitive environment, this comfort can be a game changer.