January may be hot or cold, rainy or snowy—it just depends on where you live. But whether you sport a windbreaker or a parka when you head back to work after the holiday season, January is the same everywhere when it comes to making resolutions. It marks a new year and a clean slate—which got us thinking. Why shouldn’t companies take part in this fine goal-setting tradition—especially if the goals can have a positive impact on the world AND mitigate reputational, regulatory, financial and strategic risk at the same time? That’s where programs aligned to Corporate Social Responsibility (CSR) or Environmental, Social and Governance (ESG) standards come in.
The rise of CSR
What’s different now? Sustainable Brands highlights the CSR opportunity that Unilever seized, and other companies are beginning to recognize, noting “Brands could become, in fact, an aspirational force for social good and address some of the world’s most pressing economic, social and environmental problems.” And evidence suggests that such CSR and ESG commitments can attract prospective employees, consumers and investors. “The bottom line for businesses large and small is that you get a competitive advantage regarding sales and talent recruitment by not only claiming that you support positive social outcomes but also by walking the walk and demonstrating it,” writes Wayne Elsey in Forbes
- 63 percent of American consumers want businesses to take the lead on social and environmental change
- 92 percent of Gen-Z’ers and 76 percent of Millennials say a company’s CSR engagement influences their decision to work for that organization.
- Sustainable investment has climbed 38 percent since 2016 and now amounts to $1-in-$4 of total U.S. assets—$12 trillion total
“More than 90 million Americans own our public companies through their investments in mutual funds, and millions more do so through their participation in corporate, public and union pension plans. These owners include veterans, retirees, teachers, nurses, firemen, and city, state and federal workers. We owe it to all of them – and to all our shareholders and investors who have entrusted us with their savings – to get this right.”
How resolutions can make a difference
When you stick with them, New Year’s Resolutions can have a profound impact. By committing to CSR and/or ESG, companies can realize Risk management advantages too. Globalization has made it possible for procurement professionals to build a cost-effective supply chain but has decreased visibility into the many links across that chain. The result is increased risk exposure. By auditing supply chains based on CSR or ESG standards, companies can improve visibility into emerging risks and proactively manage those risks.
- Commit to environmental sustainability to protect the planet and local communities to mitigate risks associated with pollution, wasted resources, and worker safety.
- Commit to social responsibility that supports the U.N. Sustainable Development Goals and justice for all people and mitigate risks associated with child labor, forced labor and human trafficking.
- Commit to good governance to meet the ethical expectations of employees, consumers and investors and mitigate risks associated with bribery, corruption, money laundering, and terrorist financing.
Along with the regulatory, financial and strategic risks associated with poor performance when it comes to the environment or social justice, the reputational damage that arises from media scandals can exact a heavy toll on companies. Plus, investors and consumers can weigh in with class-action lawsuits that seek to recoup losses when a company gets caught up in an FCPA investigation or forced labor is uncovered in the supply chain.
What three resolutions should you start with?
- Develop CSR and ESG initiatives to support your local community for immediate impact and U.N. Sustainable Development Goals for long-term impact. With 17 SDGs to choose from, you are sure to find goals that align with your organization’s own.
- Put words into action. A public CSR agenda may set the tone, but the proof, so to speak, is in the pudding. Everyone in your organization—from the top, down—needs to actively engage in moving the company forward with the commitment. For the procurement team, this could be realized through enhanced due diligence and ongoing risk monitoring to ensure that the suppliers and third parties your company relies on adhere to ethical standards.
- Join others on the CSR/ESG journey. Benchmarking with others in your industry—and outside of it—makes it easier to identify best practices. Collaboration also makes goals easier to achieve. (Just like having a friend or spouse on board for your “healthier choices” resolutions can help you stay on track.)
Next Steps:
- Access the 2019 Business Resolutions resource kit today!
- See how Lexis Diligence® and LexisNexis® Entity Insight work together to provide a more complete view of risk.
- Share this article with your friends and colleagues on LinkedIn to continue the conversation.
