‘ESG is good for business’

There is a call by bpTT vice pres­i­dent of cor­po­rate op­er­a­tions, Giselle Thomp­son for glob­al lead­ers to put pol­i­tics, la­bels, and de­f­i­n­i­tions aside and evolve En­vi­ron­men­tal, So­cial, and Gov­er­nance (ESG) mean­ing­ful­ly.

Speak­ing at the Amer­i­can Cham­ber of Com­merce (Am­cham T&T) an­nu­al ESG con­fer­ence held at the Hy­att Re­gency Ho­tel, last week, Thomp­son said the con­cept of ESG is ei­ther evolv­ing or head­ing to­wards its end, as there are many dis­cus­sions and dis­agree­ments glob­al­ly on its rel­e­vance.

“We’re see­ing ESG be­com­ing politi­cised across the Unit­ed States and Eu­rope with many ques­tion­ing whether “woke cap­i­tal­ism” is just an­oth­er fad, a mar­ket­ing ploy, green­wash­ing to win cus­tomers, share­hold­er loy­al­ty and ar­ti­fi­cial­ly in­flat­ed share val­ue. A large part of the de­bate is fo­cused on de­f­i­n­i­tions, met­rics, and ill-de­fined goals which all leave a lot of room for in­ter­pre­ta­tion with some ques­tion­ing “does ESG sim­ply pro­vide a tick in the box?” Thomp­son out­lined.

She not­ed that the peo­ple have seen in­flu­en­tial CEOs like Black­Rock’s Lar­ry Fink say that he will no longer be us­ing the ESG la­bel be­cause it has be­come too politi­cised.

Fur­ther, she not­ed with the dis­cus­sion go­ing in so many di­rec­tions it is tempt­ing to ask if ESG as an um­brel­la con­cept is still rel­e­vant and is the in­vest­ment com­mu­ni­ty mov­ing away from ESG pri­or­i­ties … or is this a re­brand­ing or re-in­ven­tion of the con­cept of sus­tain­abil­i­ty and good gov­er­nance?

She said as bpTT, be­ing a key mem­ber of T&T’s cor­po­rate com­mu­ni­ty, “I can stand proud to say we be­lieve it’s worth the in­vest­ment. Be­cause putting pol­i­tics, la­bels and de­f­i­n­i­tions aside, we be­lieve and have ex­pe­ri­enced that cre­at­ing sus­tain­able busi­ness mod­els that an­tic­i­pate peo­ple’s needs and help solve com­mu­ni­ty and glob­al is­sues is pos­si­ble while al­so mak­ing a prof­it. Do­ing good is good busi­ness.”

Thomp­son iden­ti­fied that while this year’s ESG con­fer­ence will gen­er­ate even more ideas and more great ex­am­ples of progress, the ele­phant in the room can­not be ig­nored.

“The on­go­ing—of­ten po­lar­is­ing—dis­course is ac­tu­al­ly dis­tract­ing from the ad­vances that are be­ing made. You could say that we’re reach­ing the point where the rhetoric around ESG seems to be over­tak­ing the con­cept. It is be­com­ing hard­er for the pub­lic and in­vestors to un­der­stand the progress be­ing made and to trust what is be­ing re­port­ed. This has im­pli­ca­tions for how we reach the gen­er­al pub­lic or, more specif­i­cal­ly, in­vestors. If we are not aligned, how can we ex­pect the pub­lic to trust what we are say­ing?” she stressed.

One sug­ges­tion to over­come this, said the bpTT ex­ec­u­tive is to fo­cus on the com­po­nents of ESG.

She said these con­cerns are what drove the cre­ation of ESG as a con­cept in the first place.

“Con­tin­ue to work to­wards im­prov­ing un­der­stand­ing and im­prove­ments in each area—en­vi­ron­ment, so­cial, and gov­er­nance. Tak­en sep­a­rate­ly, we can see the gains be­ing made in each area. We can al­so un­der­stand where we need to im­prove.”

Ul­ti­mate­ly, Thomp­son said ESG, in its many forms and de­f­i­n­i­tions, is about ad­dress­ing sus­tain­abil­i­ty—for or­gan­i­sa­tions, gov­ern­ments, and the plan­et.

“Re­gard­less of dis­agree­ments, there is con­sen­sus that as or­gan­i­sa­tions, what we do and how we do it has a wider im­pact on so­ci­ety and the plan­et. That’s per­haps why in a re­cent sur­vey con­duct­ed by Teneo, a glob­al CEO ad­vi­so­ry firm—92 per cent of CEOs said they are stand­ing by their ESG-re­lat­ed pro­grammes, she added.

Al­so speak­ing on a pan­el was man­ag­ing di­rec­tor of the En­vi­ron­men­tal Man­age­ment Au­thor­i­ty (EMA) Hay­den Ro­mano, who said more pri­vate sec­tor com­pa­nies are un­der­stand­ing how im­por­tant ESG is with­in their space.

Ro­mano said, “We have had com­pa­nies in this coun­try en­gage es­pe­cial­ly in so­cial and cul­tur­al as­pects of ESG for a long time … Pa­n­yards, tur­tle con­ser­va­tion. In Diego Mar­tin, you now have the Peas Fes­ti­val which is sup­port­ed by the Li­ons Club and small busi­ness­es in the area. So, there is a big so­cial com­po­nent al­ready. In terms of the en­vi­ron­ment, of course, a lot of the com­pa­nies are meet­ing the EMA reg­u­la­tions.”

Out­lin­ing ANSA Mer­chant Bank’s progress when it comes to ESG, head of in­vest­ment Nigel Sab­ga said it launched its first Nat­ur­al Cap­i­tal re­port last Mon­day.

He said it’s the first re­port, de­vel­oped in-house, that has come out of the Eng­lish-speak­ing Caribbean.

“As a bank, we de­cid­ed to fo­cus on nat­ur­al cap­i­tal be­cause when you look at a re­cent sur­vey that was done by the World Eco­nom­ic Fo­rum where it asks what are the biggest con­cerns or threats in the next ten years. The top four were all en­vi­ron­men­tal, with five of the top ten be­ing en­vi­ron­men­tal con­cerns,” Sab­ga high­light­ed.

In the re­port, it said “This marks an im­por­tant first step in our Banks’ jour­ney to as­sess our nat­ur­al cap­i­tal risks and op­por­tu­ni­ties and es­tab­lish a ro­bust strat­e­gy to in­form our lend­ing and in­vest­ment de­ci­sion-mak­ing with­in a sus­tain­abil­i­ty frame­work.

“By us­ing the Nat­ur­al Cap­i­tal Pro­to­col in con­junc­tion with oth­er ap­pro­pri­ate tools, we have con­duct­ed a scop­ing ex­er­cise which re­veals that the con­struc­tion, en­er­gy, min­ing, and agri­cul­ture sec­tors cur­rent­ly pose the high­est lev­els of risks to our fi­nan­cial port­fo­lios due to their de­pen­dence and im­pacts on nat­ur­al cap­i­tal.

“In the com­ing months, we will use best-prac­tice val­u­a­tion and mea­sure­ment meth­ods to ex­plore these find­ings and pin­point the most ap­pro­pri­ate av­enues for en­hanc­ing our busi­ness mod­el,” Sab­ga said.