Every Leader Needs to Understand ESG

I've lived in two worlds with a very small Venn diagram between them. The first is the tech/software industry—startups, bigger and big tech, venture capital and private equity. The second is the impact industry—where climate tech, energy, sustainability, ESG, CSR or D&I—these are the companies and people working to make the world sustainable, healthier, safer and more inclusive.

This week, I've realized that the Venn diagram between my two industries is expanding quickly and our industry is not alone. ESG is quickly becoming part of every industry and as a result, every leadership role. 

One reinforcement for this trend came during a program to prepare tech leaders to take on board roles, sponsored by our state tech industry association. While listening to the panel of incredibly impressive members of public boards, and the former governor of Massachusetts, every single one mentioned ESG as something that board members need to understand—especially if they are going to serve on the nominating/governance committees. In the mentoring session I had volunteered for afterwards, most of the questions I got were about ESG. What does it cover? How do you learn about it? 

Then I saw an announcement from one of the most innovative enterprise tech companies, ServiceNow, that they are launching an entire suite of ESG tools to support companies. You might not be familiar with them, but 42 percent of Fortune 2000 companies use their software. They are a backbone for providing digital experiences and data. There have been other ESG announcements involving large for profit/not for profit consortiums, but the fact ServiceNow was getting into ESG suggests it's gone truly mainstream. 

Finally, I'm a notorious eavesdropper and sitting at dinner, two guys at the table next to me started talking about ESG. One was an investor advising tech clients and the other a consultant advising biotech clients. They were lamenting that customers were asking for their advice about ESG and they had no idea what to advise. At the end of dinner, I struck up a conversation and they admitted they felt stupid on the topic. 

I've been part of this world for 11-plus years and it's moving so fast, it's hard to keep up. How does someone new get started?  

1. Read. The author who I think makes these topics most accessible and clear to business people is Andrew Winston (in full disclosure, a WeSpire advisor). His new book, Net Positive, is with Paul Polman, the former CEO of Unilever, one of the biggest ESG success stories. But if you are pressed for time, the Ted Talk for his book The Big Pivot is a good place to start. Two Harvard professors, Bob Eccles and George Serafeim, also publish incredible research about ESG-related topics. GreenBiz and Sustainable Brands both publish company specific topics and ESGToday focuses on the investing side.   
2. Focus. ESG covers a broad swath of topics from environment to diversity, equity and inclusion to cybersecurity and privacy. It's likely best to get a broad overview to start, but then pick an area that most interests you to go deeper.   
3. Get to know the players. There are a number of ratings firms and reporting outlets that companies have to pay attention to. Here's a short primer on who you need to know.   
4. Get involved. If you are in a larger company, hand raise to be a leader for sustainability projects, employee affinity groups, or service activities. If your company doesn't offer much, start something. The Net Impact chapters of your alma mater or city may also offer ways to network.  

ESG feels complicated, but to quote one of my new dinner buddies, "So basically ESG is just making sure that companies are doing the right thing?" Well, yes, at some level, and don't underestimate how hard that is. But I think that misses why it really matters. We live in a world of highly complex, deeply profound environmental and social problems. Solving these is also an enormous business opportunity. The leaders, and companies, who embrace this, will be the ones that win.