ESG is access to Four Capitals
The what, why and how of ESG performance and engagement.
ESG has many different meanings for many different people. It’s a recipe for confusion.
Here’s a good place to start. All the world runs on four types of capital: the earth’s natural capital to begin with, then our own human and social capital, which together create financial capital.
The more natural, human and social capital an organisation has, the more things it can do.
And the more natural, human and social capital it helps builds, for itself and for others, the more financial capital will result.
Good capital is hard to find
Performing and engaging on ESG helps access that capital.
- Those wanting access to particular land or resources need community assent
- Those wanting to partner good organisations or hire good people need a good reputation
- Those wanting to attract investors need a clear ESG strategy
In each case, ESG performance and engagement work hand in hand, and must be in sync.
Questions to consider
Thinking about the four capitals leads to 10 questions an organisation might ask itself in developing its ESG or sustainability strategy. For example:
- What social or environmental issues can we engage in to open up opportunities to build or nurture natural, human or social capital? What actions can we take to engage in those issues?
- What ESG data on natural, human and social capital would correlate most with our own business priorities, i.e. which would indicate progress as a necessary or constructive input to an immediate priority or a strategic goal? What are we doing to improve that measure?
- How can we demonstrate, through data and events, we are seeking to protect and if possible grow the capitals a stakeholder is concerned about, rather than just drawing down on it?