What Is Environmental, Social, and Governance (ESG) ?
ESG, which stands for Environmental, Social, and Governance, is a way of aligning a company’s business practices with these new expectations.
Historically, the prevailing view has been that the only true responsibility of a business is profit generation. In the 21st century, however, both customers and shareholders increasingly insist that firms also pay attention to factors such as environmental, social, and ethical impacts.
Parts of ESG: Environmental, Social, Governance
More specifically, the “E” in ESG addresses the impact an organization’s operations have on the planet. Think transportation, greenhouse gas emissions, carbon footprint, waste processing and water management practices and more.
The “S” in ESG addresses the company’s impact on society: including but not limited to community involvement, human rights practices, labor practices, equal pay and equal access.
The “G” addresses governance; arguably the “G” is the most important component of success and is especially crucial in cybersecurity and privacy programs. If you can’t track it, manage it, and report on it, you – essentially – don’t have a program. That’s how critical the “G” in ESG is for your business.
As increasing numbers of consumers, partners, vendors, and governments commit themselves to a sustainable future, a successful ESG program will do more than just bolster a company’s public image. It will establish the company as a responsible, trusted partner.
ESG and Cybersecurity
ESG programs impact cybersecurity and privacy programs in a number of ways. Most significantly, a company working to improve in ESG is naturally going to increase its focus on risk management. Cybersecurity and privacy are hugely significant risk areas and will need to be managed if a company is going to improve its overall ESG ratings.
Also, ESG introduces another layer of complexity in the governance area, particularly in the areas of transparency and accountability. It is strongly recommended that you manage ESG, cybersecurity and privacy programs by using a governance, regulation, and compliance (GRC) system such as cyberCTRL.
We opened this article by mentioning the increasing public demand for an ESG focus. But in fact, ESG compliance is no longer just a question of perception—ESG is gaining a foothold in regulatory frameworks as well. Much like the old joke about gravity, when it comes to ESG, “it’s not just a good idea, it’s the law.” Unsurprisingly, regulatory requirements often touch on cybersecurity and data management. What’s more, companies that are focused on ESG issues are more likely to be compliant, which can reduce both cybersecurity and ESG risk.
Last but definitely not least, an important part of embracing ESG programs involves reputation management. For a company to maintain a trusted reputation among customers and shareholders, strong cybersecurity and privacy programs are vital.
Cybersecurity and privacy professionals need to work closely with their ESG counterparts, because the programs all have interdependencies that need to be worked out in detail. They also share a common foundation and workflow: assessment first, goal identification second, program development to meet the goals, execution, monitoring, lessons learned, and reporting.
Do you need help managing ESG in your organization? Let us know, and we can help ensure your success.