Fundamentals ESG

ESG is relatively new to certain parts of the world. Lack of accessibility to the right information about ESG its metrics and understanding could be a roadblock.

The lack of knowledge and ownership on ESG.

Confusion as to how much is enough!

One of the key impediment/roadblock to implementing ESG in an organisation is the lack of a holistic education that people receive. The overall education process in several countries do not incorporate elements of ESG into the curriculum...this is one of the key reasons why many do not realise the phenomenal cost of not pursuing an ESG agenda. I remember teaching a module called "Global Business Context" in a twinning programme with a UK university (UWE) in 2006, and it had all the elements of ESG incorporated into the syllabus. It was one of the best modules I ever taught and it showcased the importance of environmental, social and governance issues and how pertinent it was to implement sustainable economic development policies. My students had to critically review Thomas Friedman's book "The Lexus and the Olive Tree" and also John Madeley's "Big Business Poor People" as part of their assessment and that opened the eyes of all of us back in 2006. That is what holistic education should entail...students from all age groups must be exposed to lessons on ESG to inculcate behavioral changes. Thank You.

While there are a few key challenges in implementing ESG in an organisation, two of it are I would say pose a higher severity which is the extreme weather events and the social disruption following Robotics and AI. For the first challenge, it is due to the unpredictable meteorological setups of our Earth even though we have technology for weather forecast. Extreme weather events such as heavy rainfall, hail, storms and droughts have a high impact on our daily lives and economies. They damage production facilities, disrupt business processes and decrease residential and commercial property values, as well as commodity prices. These occurrence could severely hurt an ESG-minded business practice company.

For the second challenge, I have picked the social related one is because currently, as our technology advances day by day, we could see that Artificial intelligence (AI) have become increasingly important in enhancing productivity and profitability. AI breakthroughs constantly attract public attention – e.g. robotics development and self-driving cars – and the concern that AI might eventually take over many jobs is becoming an urgent one. The jobs that risk being ‘lost’ are the ones with predictable, routine tasks (e.g. assembly line workers, record clerks etc), and those with a low level of customer interaction (e.g. food service workers, travel booking) which directly impacts the metric for the social part of ESG.

I think there are a lot of factors that could pose as a challenge to ESG, some of which are as follows -
a. embedding ESG principles in an organization needs a certain level of openness/progressive thinking among senior management/owners. More conservative organizations would probably be more cautious about this, especially if there is no clear understanding of how these broad ideas translate into their business processes at the micro level.
b. the breadth of ESG could be overwhelming. Companies need to have a clear vision or an understanding of how the ESG principles can be aligned with their own purpose. They also need to know that they have a choice on where to position the company or ESG areas to prioritize.
c. integrating ESG requires resources, such as for review of processes and how to integrate ESG, having experts on board to provide advise on ESG practices, maybe even transforming operations and long-term planning.
d. from the policy side, there is also a need to develop or improve policy frameworks, regulations, and need also for experts to advise on this; and also to engage stakeholders especially businesses to support and adopt ESG.

Implementing ESG in an organization involves new practices that may challenge traditional business practices and some businesses may not be so comfortable with these new changes. Another roadblock in implementing ESG practices in a company is the misconception that sustainable business practices involves high costs hence reduces profits. High costs may be incurred initially, but in the long-run, sustainable business practices increases savings and therefore profit and revenue. 

Implementing ESG practices in an organization can can face many challenges -leadership commitment, education and awareness.

Implementing ESG is the challenge now days due to less education and awareness, and the products are comparatively higher, its needs more attention from Government and NGOs and other investors to ESG induced product should be reasonable.

To my opinion, the first impediment is the lack of legal regulation of ESG with firms and companies, because in the past CEOs and stakeholder seem ESG practices as an additional criteria- not compulsory ones.
Second one, it's from the difficult of measuring and collecting some ESG scores such as Governance Score, Environmental Score,...