Businesses can help lead the nation's healing process

Bernie Kilkelly, BridgeTower Media Newswires

After a hard-fought campaign and election process, President-elect Joe Biden addressed the nation last Saturday and quoted a familiar passage from scripture that could not be more appropriate for our deeply divided nation. This passage from the Book of Ecclesiastes in the Old Testament is also well-known from the song “Turn! Turn! Turn! (To Everything There is a Season)” written by Pete Seeger and made famous by the Byrds in the 1960s.

In his victory speech, Biden said: “The Bible tells us that to everything there is a season – a time to build, a time to reap, a time to sow. And a time to heal. This is the time to heal in America.”

The healing process will not be easy due to the decline in civil discourse that has infected our nation over the last four years, led by a president who trafficked in division and bullying, both online and offline. Thankfully, the business community is well positioned to help lead the healing process by continuing to follow the best practices of the Environmental, Social and Governance movement, usually referred to as ESG.

The ESG movement traces its roots to the socially conscious 1960s, when institutional investors and pension funds decided to use their influence on public companies that were involved in South Africa’s apartheid regime by divesting their investments in these companies. ‘Socially responsible investing’ also focused on health and ethical issues including tobacco, gaming and pollution.

Today, ESG has evolved to become a broad range of criteria by which investors evaluate whether companies run their business in a sustainable way. Environmentally sound business practices have grown increasingly important as the dangers of climate change become more apparent every day. The Social criteria of ESG, such as diversity and inclusion, came to the forefront this year as the issue of systemic racism was highlighted by the Black Lives Matter movement.

The governance criteria of ESG, which evaluates how a company’s board of directors and management team establish policies and procedures to run their business in a sustainable way, have never been more critical. While sometimes dismissed by naysayers as political correctness, the principles of ESG and sustainability have been embraced by the investment community and the business community.

According to the Forum for Sustainable and Responsible Investing (US SIF), more than a quarter of all professionally managed assets in the U.S., representing more than $12 trillion, is invested according to sustainable investing strategies. Several of the largest institutional investors in the world, including BlackRock, Vanguard and State Street Global Advisors, have put ESG criteria at the center of their decision-making process for voting on company proxies.

Not surprisingly, large corporations have responded to investor demands for improved performance on ESG criteria. The Business Roundtable, an association of the CEOs of America’s largest companies, issued a statement last year that the purpose of a company is not just to make a profit for shareholders, but to create value for all stakeholders, meaning customers, employees and the communities where they operate.

ESG principles should be embraced by businesses of all sizes, as a growing body of research shows that companies that follow sustainable business practices have improved financial results. The link between good corporate governance, including having strong shareholder rights and satisfied employees, and strong corporate performance, has been demonstrated in numerous studies including by the Harvard Business School and University of Pennsylvania.

Which brings me back to the topic of healing. Companies have a great opportunity at this time of national division to set an example for the communities they do business in, by continuing to treat their employees and customers with respect and by following ethical and sustainable business practices. By doing this, we will hopefully enter into what Ecclesiastes prays for: “a time of peace.”

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Bernie Kilkelly is vice president and director of Corporate ESG Disclosure for Governance & Accountability Institute, Inc., (https://www.ga-institute.com) a leading consultant on corporate sustainability and ESG ratings.