Last year, we shared an article about Corporate Social Responsibility and why it is important. This inspired us to take that one step further to another topic that’s focused on making the world a better place. That topic is ESG – or Environmental, Social, and Governance. These three words together are a blanket term that speaks to your organization's impact on society and the environment. The term was coined in a 2004 United Nations (UN) report titled “Who Cares Wins” that was meant to raise awareness about the importance of ESG.
When you dive deeper into what each of these three words stands for, you’ll start to see that they are not only measurable, but they speak volumes.
The Environmental aspect focuses on nature and preserving the natural world. This part of the three focus areas asks: What is your company doing to address environmental issues? This question extends beyond your business to your supply chains as well.
Some of the most common areas to consider include:
- Energy efficiency and consumption. Are there ways that your company can cut down on energy consumption? What methods can you use to make processes more efficient to reduce energy costs?
- Greenhouse gas emissions. Are you contributing to greenhouse gas emissions? (Chances are the answer is yes, but this is a problem for some industries more than others). How can your emissions be reduced or eliminated?
- Pollution. Is your production line a significant source of air or water pollution? Is it possible to reduce your pollution or make efforts to clean up pollution that has already occurred?
- Deforestation. Is your company contributing to deforestation? Can you give back in a way that addresses the effects of deforestation, whether it was caused by your business or something else?
Not all of these areas may be relevant to your business, however, being conscious of energy use and how the company’s consumption affects the environment is always important.
The Social aspect focuses on relationships. The connection between the community, companies, and individuals is critical. Relationships drive community development and support, and businesses can play a vital role in that growth.
The social portion of your business will often focus on giving back to the community that makes your company’s success possible. Supporting and uplifting the community is not only good for the people who live and work near you, but it often directly benefits your company as well.
The social aspect might extend to things such as:
- Diversity, Equity and Inclusion. Does your company strive to include everyone both as part of your workforce and in your customer base? Are there diversity and inclusion functions or events that your company can support?
- Customer satisfaction. Your company likely already focuses a great deal on customer satisfaction. Happy customers mean a stronger business, which, in turn, supports a better community.
- Pay and benefits. When associates get good pay and benefits, they can spread that wealth amongst others, often improving many aspects of their lives.
- Volunteer hours and community investment. One of the best ways to develop a relationship between your company and the community is to give back through direct services. Company-paid volunteer hours help associates connect with the community while investing time and labor into the organization.
As a business, showing the community (and the world) that you care is a win-win for everyone involved.
The Governance aspect is sometimes overlooked because it turns to internal policy and development rather than focusing on the planet or community. However, having the right governance is critical for the company to develop the other focus areas.
In the context of the UN Report and the ESG concept, Governance focuses on compliance and transparency. It shows the world that a company is acting in line with local laws and regulations and operating ethically. Governance might include:
- Board structure or composition.
- Executive compensation.
- Company policy and transparency.
- Preventing things like bribery, corruption, and other unsavory practices.
Governance shows that the company can be trusted because they engage in honest and sound practices at every level of the business.
Why It’s Gaining Traction
Both Corporate Responsibility and ESG-minded business practices have gained traction in recent years because they are closely related. They are focused on making the world a better place—and who wouldn’t want that? Improving the world is something we can all stand behind.
With deep roots in our community, Lakeland Bank has shared and advanced the societal goals and aspirations of our customers, shareholders, and associates for over half a century. We are proud to have formalized our Environmental, Social, and Governance strategy in 2022 and plan to release updates regarding our progress annually to hold ourselves accountable.
Check out our ESG commitment in action! And, to learn more about the Corporate Social Responsibility at Lakeland Bank, take a look at the following resources: