As we know, there are three elements to ESG: environmental, social and governance. And while no one area is more important than the other, as we enter 2022, I would like to focus more on the social criteria element of ESG and to outline what I think treasurers can do to make a real impact in this area.
‘Social criteria’ in ESG looks to answer important questions such as:
While these questions are important, they are by no means exhaustive. The ‘social criteria’ element covers far wider concerns.
The pandemic has thrown up a lot of opportunities for businesses – and indeed treasurers – to look again at the role we in our professional community and our employers can play in the area of ESG.
I have heard the argument that overall employee welfare should reside firmly within the control of the CEO and human resources and treasurers should focus on areas of competence, for example, cash management. However, I share a different point of view. Treasurers are leaders and therefore have a part to play in setting the direction and culture of their organisation.
There is no running away from the fact that getting involved in ESG conversation can be challenging. My advice to those in treasury is to start by asking four important questions.
If there is one thing we have learned from the pandemic, it is that employee wellbeing can no longer be treated as ‘business as usual’. It has attained a very high level of importance. One idea is to change the way we remunerate employees, and as the person with the ‘purse string’ of the business, treasurers are well placed to drive this initiative in conjunction with the relevant stakeholders.
But there’s no doubt that the economic impact of the pandemic has been broad and deep. The strain on the global economy and the decimation of various parts of our economy has been well documented. From the travel and tourism industry to service organisations, we have seen global loss of economic activity, increased unemployment, drastic fall in demand, disruption of supply chains and closure of a swathe of companies. While companies and shareholders have suffered, the major burden has fallen on the shoulders of people, employees and small business owners.
In normal times, a lot of the gaps caused by socioeconomic inequalities are picked up by charitable and not-for-profit organisations, which provide services such as food banks. In the past 24 months, funding to this sector has dwindled considerably. There are opportunities for business entities to step in and support these institutions.
I know it sounds like a cliché, but treasurers control the most vital aspect of the business: cash. Given that, they are uniquely placed to drive, support and implement policies that would ensure that their organisations engage with this sector – and to ensure that some benefits filter to those who bear the heaviest burden.
Finally, treasurers should be driving positive behavioural change through our own individual and collective activities. We should encourage our teams to volunteer. Volunteering positions abound that would serve as developmental opportunities for our team members.
That can be anything from acting as treasurers for charities or serving as trustees, but whatever we do, we should be using our skills to engage with their communities and position our business in positive light. Taking on speaking engagement in schools and colleges is also an avenue to add value to places where our businesses are based.
ESG will continue to be an important discussion and conversation point. Treasurers have a unique place in driving that engagement and bringing fresh ideas and thoughts to the table.
The pandemic presents all of us with the opportunity to make the changes we desire.
Adesola Orimalade has held treasurer roles at various companies including Kiwi, Hogg Robinson and John Lewis
