Environmental, social, and corporate governance are the three factors that contribute to measuring a company’s sustainability and ethical impact. ESG is becoming a top priority for many businesses as it directly affects consumer behaviour, employee motivations, and investment opportunities.
We interviewed Anna Russell, Director of ESG at Bupa Global & UK, to find out why it’s important for companies to invest in ESG, the risks of not prioritising it, and what she thinks the future holds for ESG.
Watch the video interview here:
Q: Why is it important for companies to invest in ESG?
A: It's so important for companies to invest in ESG, firstly because it's simply the right thing to do. So, making sure that we're doing things to improve our planet's health, improve things for people, and improve things for our communities, and by doing that, we should improve our organisations as well.
We are building our brand, building trust, and these days it's a way to attract and keep employees, because people want to work for companies that are doing the right thing - that are doing more than just making profits. So yes, they want to work somewhere successful, but today, success means actually doing things which go beyond the bottom line.
Customers also want to buy from those organisations more and more, and certainly at Bupa it's about living our purpose. Our purpose as an organisation is to help people to live longer, healthier, happier lives and to make a better world, so it really sits at the heart of what we're about as an organisation. And we're so committed to making sure that we can have a healthy planet. Because healthy people need a healthy planet.
Q: How has ESG changed over the years?
A: There have been some quite big changes I think over the past couple of years. It's gone from quite a specialist subject to something that is at the top of the agenda and at the boardroom table.
And I think it's gone from being a ‘nice to do’ to an absolute must do. It’s also something employees now care about, customers care about, and investors care about. So, because they care about it, it really means that organisations must have it at the top of the list.
Q: How do you ensure your ESG strategy is deeply embedded into your company culture?
A: I think it really helps to have a shared purpose for everybody that works in the company. And I feel very lucky to work in an organisation like Bupa that does have that purpose, because it really means that everybody lives and breathes it, and it is built into the company strategy. It is built into the hard targets and key performance indicators and built into how we reward people as well.
I think in terms of how you embed it, I don't think it's necessarily just a ‘one-size-fits-all’ approach. I think you need a top-down approach, where leaders are talking the talk and they are really focused on it and build it into their objectives. But I also think you need a bottom-up approach as well, so that every single employee can contribute to really moving that ESG agenda forward, whether it's doing things better for the environment or doing something to support their community.
At Bupa, we’ve embedded it even more into our culture by having some very specific projects that make sure that it sits front and centre. We ran a fantastic project last year called eco-Disruptive, where a lot of our employees worked with leading start-ups to tackle some of the environmental challenges that we all face, like carbon reduction and the circular economy. By embracing that type of initiative in organisations, you shine a light on the things that really matter.
Q: What do you think is the risk of not investing in ESG?
A: The risk of not investing in ESG these days is huge, and all organisations need to be thinking about their long-term sustainability, not just from an environmental point of view, but sustainability in terms of their long-term prospects and growth. I think the companies that aren't thinking about this agenda - about how they can reduce their carbon footprint, positively contribute to the community, and positively improve people's lives - will find that it gets harder to attract people to work there.
But also, they’ll find it harder to win and keep customers in the long term. So, I think ESG investment is 100% linked to organisations’ long-term growth, and particularly for employers keeping talent and winning talent as well. It’s so important.
Q: Do you think there are any gaps in the requirements of ESG reporting and if so, what are they?
A: First of all, I think we've made good progress on ESG reporting. There are strong regulations about measuring and reporting on carbon reduction, reporting on gender pay gap -and ethnicity pay gap is coming too - and organisations need to pay attention to that. That said, I think there's always more that can be done, and organisations need to hold themselves to account.
If I look at the environmental space for example, carbon is not the only game in town. It's really important, don't get me wrong, but we should also be looking at how we are reducing waste and considering water management. So, I think definitely in the future we're going to see more reporting requirements coming in. And actually, I think some companies are starting to get ahead of that already, which is good to see.
Q: How do you determine the success of your ESG framework?
A: It's about whether you are meeting your targets. So, are you meeting your targets for carbon reduction year on year? Are you reducing your impact on the environment? Are you investing in communities in a way that is making a really positive difference? I think number one, you need to make sure that you've got some clear targets, and number two, are you delivering on them?
There are also other measures - people vote with their feet. Are you losing too many employees and is that potentially because you're not doing the right thing in this space? Are you losing customers, or are you winning employees and customers? So, thinking about it in a broader sense is very helpful.
Q: How can businesses navigate the ever-changing landscape of ESG?
A: Focus on the things that matter most to your organisation, which will both improve the planet’s health, improve people's lives, and improve your employees’ lives. And by doing that, also improve your organisation and its long-term prospects. Thinking about what the biggest positive difference your organisation can make is really focuses the mind.
I think the other thing organisations and people can do is actually have their eyes and ears open to what other organisations are doing, and really applying the ‘growth mindset’ to this as well. The work here is never done, there is always change, there are always new things coming, so it’s about making sure that you are prepared to put in the work to learn about what others are doing. And part of that, is really listening to what your employees are saying, what your customers are saying, and what matters to them - that will often guide the path that organisations need to tread.
Q: How do you see ESG evolving in the next 10 years?
A: That is a really big question, and I can't predict the future - I wish I could - but just a couple of thoughts on this. I think ESG has just got bigger and bigger over the past couple of years, and it's only going to become even more prominent. It is going to be at the top of the agenda – ‘be’ the agenda for many organisations - thinking about how they can give more than they take.
The pandemic has certainly been a wakeup call for all of us, looking what we should do as organisations to improve the world around us, and the recent Edelman Trust Barometer shows that people and employees are actually now looking to their employers to play a leading role. I think we'll see organisations actually working in partnership with their employees, working with their communities and really thinking about how they can make the most positive difference in the work that they do and keep doing the right thing. Not just because they're measured on it, but purely because it is the best thing to do.