ESG performance – an urgent imperative for the post-Covid-19 re-design of non-profit and purpose-led organisations

Take-aways from the C&E Advisory Breakfast Dialogue, 24th June 2020

Covid-19 has shown that no one sector has the monopoly on doing good. It’s no longer sufficient for NGOs to view themselves as the “good guys” and to define themselves as operating in narrow swim lanes - working on exclusively “social” or “environmental” issues. Similarly, purpose-led businesses need to transform around the ESG agenda.

As parts of the world begin to recover from the effects of Covid-19 and purpose-led businesses and non-profits plan for a post-pandemic future, re-imagining their theories of change and building new business models, the C&E Advisory breakfast dialogue aimed to explore and discuss three key questions:

  • Why is the ESG agenda an important input as non-profit leaders and purpose-led organisations look to “build back better” post Covid-19?
  • What are the key considerations for success in the journey to building and implementing a coherent ESG narrative and plan for non-profit organisations? And,
  • What can the corporate and non-profit sectors learn from each other in their respective pursuit of “purpose” and “mission”?

C&E Advisory convened executive leaders, seasoned engagement and Responsible Business professionals from across the corporate and third sectors, including: Comic Relief, Swarovski, Malaria No More, Aviva, Macmillan Cancer Support, Bank of America Merrill Lynch, Hubbub, Equinor, Leonard Cheshire, Red Badger, and St John Ambulance, among others, to collectively explore this topic and share experiences.

Key take-outs from the dialogue, which was moderated by Manny Amadi, C&E’s CEO, include: 

  • This is a seminal moment: Covid-19 and #BlackLivesMatter should trigger a once-in-a-generation opportunity to make real change, even as organisations work to ensure their survival.
  • Covid-19 has shown how organisations can react at speed when they really need to. Agility and “speed to impact” can be important features of organisational responses to ESG-related issues. 
  • The importance of reading and acting on “weak signals” that highlight latent problems.
  • As the #BLM movement sharpens focus on diversity and inclusion in all organisations, there’s a need to strike a balance between too much listening resulting in too little action, versus the danger of acting in haste / at a superficial level. 
  • Many organisations are facing similar issues: solidarity and collaborative working are essential.

Ruth Davison, CEO of Comic Relief and Dax Lovegrove, Global Sustainability Lead for Swarovski ignited the session by sharing their take on the three key questions, with subsequent whole group exploration.  

1. The importance of the ESG agenda as non-profit leaders and purposeful organisations look to “build back better” post Covid-19

Covid-19 has been a wake-up call, as has the #BLM movement. Clearly, it is not just what you do as an organisation that matters, the manner in which you act is equally important.

The narrative “building back better” is a useful one, both for non-profits and corporates. Covid-19 has given us all a chance to step back and see what particular issues have surfaced. There is much to be learned from Covid-19 that could help address the challenges set out by the UN Sustainable Development Goals (SDGs).

A SHIFT TOWARDS PROACTIVE CHANGE

Under the glare of negative media spotlight, organisations have often dealt with sensitive issues in a reactive manner, resulting in positive change. It’s now time to make change proactively - designing a holistic ESG agenda can enable this.

However, that so much progress is required across so many areas, can make the task feel daunting and overwhelming. It is therefore important to identify the issues that are most relevant and important to our stakeholders and on which our organisations can make the greatest possible impact. Focusing on material issues enhances the chances of creating and sustaining value for stakeholders. 

The Catch-22 of needing to consult stakeholders about sensitive issues, without rushing into action that may then be judged to be superficial, balanced against the danger of never moving from warm words to real action, was highlighted. Much discussion followed on how to actively listen and then translate learnings into action.

TRANSPARENCY AND ACKNOWLEDGEMENT THAT WE ARE ALL ON A JOURNEY

Another conundrum was how an organisation can stand for something in the public domain, such as #BLM, whilst recognising that the same organisation is still moving towards full diversity and inclusion, and may be on that path for a long time yet.

Participants shared these concerns and agreed that knowing they were “all in the same boat” was helpful. Whilst major issues may have been highlighted, they cannot be solved overnight. There was a hope that the media (and the public) could be more accepting that organisations are “not perfect, but on a journey”. Leaders have a role to play in setting the tone for this necessary messaging.

There was an acknowledgment that the global disruption caused by Covid-19 will likely lead to progress and that ESG metrics can help define the strength of organisations – both corporate and non-profit.

2. Key considerations for success in building and implementing a coherent ESG narrative

DIVISION, SET-BACKS, AND DISPARITIES LAID BARE BY COVID-19

The Covid-19 crisis and the #BLM movement have highlighted the fact that we live in a divided and polarised world. For an ESG agenda to be successful, it must resonate with all stakeholders, as well as resulting in value creation.

As an illustration, the retail industry has been scrutinised by non-profits to see whether retailers have stood by their suppliers and vulnerable workers in their supply chains during Covid-19. Going forward, the relationship between the retailers and their suppliers needs to be more equal.

This view was echoed in the results of a post-Covid-19 consultation with 150 companies which highlighted a shift in focus to resilience and welfare (of staff, customers & supply chains).

Pre-Covid-19, the circular economy was gaining traction, but the crisis has created greater single plastic use (PPE) and retailers now have huge stock surpluses to deal with. Progress in these areas will have to regain momentum.

MAKE PROGRESS QUICKLY, BUT IN LOGICAL STAGES - AND TOGETHER

Diversity and inclusion can be done incredibly badly or at a superficial level. There is room for non-profits and corporates to help each other to do this more effectively. In dealing with big challenges such as diversity and inclusion, there’s a need for a balanced approach, without a bias towards either strategy or action.  These challenges need to be broken down into actionable workstreams to make progress. And communicating (if true!) that an organisation is committed to a path of improving diversity and inclusion is in itself an important step forward. Necessary, though not sufficient.

Participants felt that Covid-19 has demonstrated how organisations can react at speed when they need to – in order to survive, but also in order to meet stakeholder needs and expectations. The same momentum could be used to meet the challenges of implementing a holistic, deeper, ESG agenda, especially in response to expectations around diversity, inclusion and representation.

3. Learnings for both corporate and non-profit sectors which can be shared in their respective pursuit of “purpose” and “mission”

WELLNESS – A NEW WATCHWORD FOR BOTH SECTORS?

When working in partnership, corporates can often be too narrow in their focus, while non-profits can be guilty of being too theoretical. The focus for cross-sector partnering needs to be both business-relevant and purpose-led.

We need to re-imagine the future. There is a case for “wellness commerce” – more considered products that are environmentally and socially sound.

Covid-19 and the #BLM movement have highlighted that we live in a divided world; some people have too much, many more don’t have enough. Social issues have taken centre-stage, but they are deeply interconnected with the environmental agenda. Better understanding of the linkages between e.g. poverty, wellness and the environment can help us to optimise the use of our shared resources. 

There is growing evidence that purpose-driven businesses have been more resilient during this crisis. There is also indication that the public is likely to have greater expectations of companies that have benefitted from public funding during the pandemic. A sense that companies have a greater duty to serve society as well as shareholders. 

“WEAK SIGNALS” AND “COURAGEOUS CONVERSATIONS” CAN LEAD TO POSITIVE CHANGE

Participants all embraced the concept of paying attention to the “weak signals” which can indicate where future negative issues or indeed, future opportunities may lie. Examples given include early calls to reduce single-use plastic being ignored by higher management in a leading organisation, until there was a real groundswell of opinion on this subject, and action only following at that point – at higher cost.

Similarly, holding “courageous conversations” with internal and external inputs could be extremely valuable in identifying and tackling sensitive issues within organisations.

Some participants’ organisations were further along the path to holistic ESG agendas, with potential issues identified and clear strategies in place to address these. Both Covid-19 and #BLM have helped focus minds on accessibility and inclusion issues and allowed these organisations to stress-test their ESG standards. There was a clear willingness to share these learnings and, from those playing catch-up, an eagerness to learn.

TRANSITIONING FROM FEAR AND INACTION TO AGENCY AND PURPOSEFUL CHANGE AROUND #BLACKLIVESMATTER

Regarding the difficulties in moving from listening to action on issues raised by the #BLM movement, participants encouraged others to stop focussing on what they hadn’t yet achieved, but to think instead about what could be done, and to take heart from the fact that all organisations feel that they could improve. There was also a call for transparency and clear articulation on how change will be achieved.

On a positive note, there was a call to change the way we approach #BLM issues – with a move away from addressing a guilt-based need for change, towards recognising the potential that both non-profits and corporates have to be the agents of purposeful change.

There was acknowledgement that organisations can achieve a certain amount individually but to realise systemic change, coalition working would be required.

DIGITAL INSPIRATION – SPEEDING THE PATH TO IMPACT

The digital sector experience was highlighted as a potential accelerator of change on ESG and #BLM related issues. Drawing on agile thinking and working in sprints can help to quickly convert “talk” to purposeful “action”. Participants were urged to break up the silos, work across sectors, and form coalitions that convene around mission. User-led design principles - listening to your stakeholders and designing solutions around what you’ve learned is critical. Keep the mantra “speed to impact” in mind.

In summary

There were many consistencies in thought about where the disruption since January 2020 has brought individual organisations and our society. The twin forces of Covid-19 and the #BLM movement could herald a new era of closer collaboration and co-operation, both within each sector and across the non-profit and corporate sectors to build holistic and deeper approaches to ESG and purposeful business.

In relation to diversity and inclusion issues, participants were encouraged to “get comfortable with being uncomfortable” and to consider what reconciliation and reparative work in action would look like.

There was strong sentiment that this is a once-in-a-generation opportunity to make change; a seminal moment that we must grasp, even though the thought can also be terrifying “in case we get it wrong”. Drawing inspiration from our rapid responses to Covid-19, the key is to decide how much change must be made – and to make that change at necessary pace.

About the Breakfast Dialogue Series

C&E’s Breakfast Dialogue series are free, by invitation, informal discussions held over a light breakfast and involving a dozen or so senior participants from corporate, NGO and public-sector backgrounds. They are highly interactive, informed discussions in which participants share their perspectives, experiences, and insights – under Chatham House Rules.