The disruptive wave of upcoming ESG regulations, standards, requirements and expectations will ultimately affect all organisations, big or small, private or public and regardless of industry.

The change has not come about unexpectedly as a roaring thunder in a clear sky. Rather it has been brewing, evolving and manifesting in a process of slow amalgamation of pressures from:

1. Consumers

2. Social activists / social pressure groups

3. Institutions

4. Investors

5. Employees

6. NGOs

It wouldn’t be far fetched to argue that a significant part of the developed world no longer tolerates enterprises generating margins that do not take into account the real costs of diligent planning, proper compliance, thoughtful leadership and ethical conduct.  

For sustainable development to be achieved by a business, a holistic paradigm is required that should be manifested via a harmonisation of the following three core elements:

(i)   economic growth

(ii)  social inclusion

(iii) environmental protection.

That being said, beyond the intricate veil of encouraging ESG related announcements and spirit-lifting abstractions, a hard reality awaits managers, leaders and supervisors (and ultimately employees) who are called to embody and live the new reality and take day to day decisions with real economic costs and bottom-line impact in the new era that is unfolding before them.

A “tug of war” is increasingly coming into play between the supremacy of monetary and non-monetary values and priorities and related dilemmas often hinge on short term vs long term focus and considerations on matters such as:

• The type of raw materials to be used in production
• Upgrading items of capital (e.g trucks, machinery, factories) to be compatible with sustainability requirements 
• Revising and redesigning processes, systems and procedures 
• Upgrading infrastructures to reduce carbon footprint
• Updating recruitment/HR/performance review policies to accommodate DEI considerations as well as ESG linked values/priorities/performance metrics
• Integrating more responsible labour policies and relations
• Designing truly integrated CSR policies

The combined impact of the various multifaceted ESG related constraints and dynamics is completely changing the playing field.

The proverbial alarm rings louder especially for large organisations with inertia deeply entrenched in their various organisational sub-strata.

Adaptation will be painful but change is now truly a matter of life and death:

The adage “adapt or perish” seems truer than ever. Innovation surfaces as the only true antidote to inertia that threatens to swallow organisations that will fall behind the ESG game and thus risk to be rendered highly unattractive for investors, customers, creditors or simply risk become obsolete.

Innovation and creativity however require managers and employees who are self-driven, confident and engaged enough to step outside their comfort zone, try new things and test themselves in new ways without fearing that they will lose their job (or self-esteem) if they stumble and commit mistakes in the process of applying the new rules.

In the new era unfolding before us, leaders and managers are (or ought to be) the true drivers of change, high employee engagement and innovation. 

Thus leadership has no other viable option but to foster inclusive cultures of highly engaged managers and employees.

The key to inclusive cultures is psychological safety and trust. 

Inclusive cultures are more innovative cultures because people are more comfortable taking risks. 

A creative and innovative workforce can be a large factor in a company’s ability to hit audacious ESG goals.

So dear leader, are you ready to confront the inevitable, embrace the uncomfortable and sacrifice a challenging present for a most promising future?