The other day a student asked me about different career options in the broader area of ESG.
What I told her is that these three concepts have been brought together by the finance industry and the rating agencies that work with them but that they are three, very different topics.
The E is about the relationship between business and the natural environment. There are a number of roles to play in this space and they tend to revolve around things like facilities and energy management, carbon emissions, the impact that a company has on nature, and in some cases product safety. If someone was serious about spending their time reducing air and water pollution and/or dealing with climate change, this is the path to take.
The S is about the social impact of business. For many years this was about hiring practices, health & safety, and the relationship between a company and the communities in which it operates or its social license to operate. This idea has grown to include the idea of Corporate Social Responsibility and lately is all about Equity, Diversity, and Inclusion. What is important is that this path is deeply connected to human resource management and the people dealing with these issues often report to the Chief Human Resource officer of large corporations.
The G is for governance and has to do with the way the Board of Directors interacts with the Senior Leadership of a company. Typically people get involved with Governance when they begin to sit on boards, act as Board Secretaries, or in some cases work as a staff to a specific committee such as the Sustainability or CSR Committee if there is one.
Besides these three areas, there is a large number of rating agencies and consultants who propose different ways to measure and compare the ESG performance of companies. All of these have positions for people who come up with different ways to measure and compare as well as others to do the actual work.
My student was actually interested in Private Equity and I explained that many funds are actively working to make ESG performance a criterion for making investments. In that respect, they all need people who can do the due diligence on these issues just like they already have people who can deal with finance and other sector-specific issues. Similar roles exist in European banks which are now required to report on the companies they lend money to using the EU’s Taxonomy (See link).
The point of this post is that it is not enough, in my view, to say you want to work in ESG. A more nuanced approach is to think a bit more deeply about what aspect of sustainability or governance you are really interested in and perhaps also what space, suing the framework described on this site, you want to do it in.
The last thing is that it may be that in the future the role of the Chief Sustainability Officer will fade away as these issues become more ingrained in the responsibilities of the other members of a company’s Senior Leadership team.