With COP26 looming large on the horizon, much ESG communications focus will of course be on the environment in coming months.
But while there’s a growing appreciation of the need to keep social aspects in balance, as their importance for value and reputation are understood, governance spends less time in the limelight from a corporate storytelling perspective.
That’s perhaps understandable, given that governance issues tend to air themselves in public when things go badly wrong. Yet while those of us running ESG programmes and advising on communications tend to ensure that governance factors – and risks – are well-covered as part of an overall strategy, getting clear information from the organisation on governance matters can be difficult.
In the news this week, there seems to have been a growing sense that many ESG strategies are too narrow across the business as a whole, with a survey by the governance NGO OCED pointing to a lack of executive confidence in the, according to a Reuters story.
Meanwhile an opinion piece in the Financial Times outlined why boards – others than at US and UK corporations – may actually be too shielded from the realities of investor pressure for ESG-led reform. Effectively, it makes a case for both environmentally and socially-led change in business in parallel with a persistent and thorough focus on governance factors to help steward and enact that change.
And we’re beginning to see a light shining on the governance characteristics of companies given local legal frameworks and culture, such as the FT’s piece on governance reform required in Japan and an International Financial Law Review look at India.
This all brings into question not only what governance factors are most important to business value and reputation, and how to improve and report on them, but how communications people can get accurate and relevant information on them in the first place. Governance being the domain of boards, executive committees and C-level decisions, information assets can centre on policies and procedures, rather than iterative detail that shows performance and, where relevant, change.
I put this to Charlotte West, who has been in the thick of ESG and communications strategy for technology company Lenovo for more than a decade. Charlotte, who spoke at last week’s PRMoment event on what makes a good ESG report, is Lenovo’s Executive Director of Global Corporate Communications and also a Board Director of the Lenovo Foundation. As well as being responsible for all communications globally, she is also Member of Lenovo’s ESG Oversight Committee, for a business that has been reporting on ESG factors for 15 years.
On the question of how difficult it is to get access to accurate ESG data, she said governance was undeniably the toughest. “For E and S there are programmes in place, and tangible and measurable targets and KPIs that we track and over time. A lot of governance work is intangible or might be about having systems in place that monitor things like responsible sourcing or anti-corruption,” she said.
As attendees at last week’s event heard, Lenovo has a team that essentially oversees all ESG data-gathering across the business. “Lenovo’s environmental affairs team has a remit across all ESG, but works closely with different teams across the business to pull that data together. For example, for governance the team might work with the ethics and compliance team, security team, or privacy team, to pull specific data. For social data the team will work with the Chief Diversity Officer on our diversity and inclusion data. For environmental data it is very much in the remit of environmental affairs, which in Lenovo’s case sits within our legal department,” she said.
Listed in Hong Kong, Lenovo is subject to some particularly stringent ESG regulations, so has had to develop a data-gathering and reporting function with a clear model for providing robust information and tracking performance across all E, S and G factors. As Charlotte put it, “If we can’t commit to a goal with a clear path and agreed date then we simply won’t. There will always be emerging areas that we might want to talk about that maybe don’t have such a data focus, but we wouldn’t lead on this, we might treat them more as anecdotal proof points.”
Making those commitments, and reporting regularly on progress, for governance factors will always be challenging, but the Lenovo formula is an example of a well-established ESG communications ‘machine’. And while governance may not capture the imagination or the headlines in ways that environmental and social aspects can, it can make the rest of ESG storytelling hang together.
“For us we bring the data back to our core corporate vision and purpose – of delivering smarter technology for all. That helps us focus the storytelling in a way that makes sense for who we are as a company and where we are making an impact in the world. Rarely is the data in itself a story, it’s perhaps what it’s taken behind the scenes to deliver on that metric that becomes the interesting element,” said Charlotte.
The ESG News Review is written by Steve Earl, a Partner at BOLDT.
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