Our colleague and Head of ESG, Hind Salhane, was one of the speakers at Love Tomorrow 2024. The sustainability conference, which originated in the wake of the Tomorrowland festival, targets passionate and innovative minds who want to work towards a better future for the planet and our society. It gave her the chance to share ideas, inspire others and spark meaningful conversations. In this article, we look back at her message, comparing building a sustainable future to cathedral thinking.
Cathedral thinking is a way of selfless long-term thinking. The workmen who built Notre Dame in Paris or the Cologne Cathedral, centuries ago knew that they might never witness the result or witness the inauguration. Yet, they worked on it with heart and soul. The essence of cathedral thinking refers to working towards a future we can imagine but will not experience ourselves.
This view pursues goals that transcend a lifetime. It asks us to think about the impact of our actions on (distant) future generations. What kind of world do we want to leave for our children and grandchildren? It also calls for immediate action, which requires patience, dedication and a deep sense of responsibility. Even though we will not be able to enjoy the results ourselves, we need to think more like the builders of 1,000 years ago today.
Conflicting forces
It sounds great, but companies are moving in a world that demands immediate results. Short-term. Quarterly reports, financial targets and numerous other KPIs create constant pressure. Different factors demand immediate attention every day. Who is selfless enough then to work only for our children and grandchildren?
However, we should not give up on our current needs when thinking long-term. On the contrary, these two seemingly contradictory forces - immediate success and sustainable success - can feed each other.
ESG (Environmental, Social and Governance) is one such concept that perfectly illustrates the balance between current needs and future goals. At first, ESG seems overwhelming. But once you realise its simplicity and understand the real reasons and benefits behind it, ESG creates the most valuable ally.
ESG broken down
Governance: what does good governance mean?
Good governance is essential for effective management of your business and building strong, long-term relationships with your customers. These, in turn, are crucial to your company's economic stability. Acquiring a new customer costs you seven times more than retaining an existing one (Bain & Company study). It is a fundamental business concept that has a significant impact on your portfolio return.
Portfolio return reflects, among other things, the frequency of repeat purchases, services or subscriptions. It provides insight into a company's historical and potentially future performance, the volatility of its financial results and its overall value. M&A professionals examine these factors closely during due diligence.
Good governance emphasises lasting relationships. Companies need to build trust with their customers, suppliers and other stakeholders. Transparency, accountability and ethical management are crucial here. As are whistleblowers. They play an important role in upholding standards by reporting unethical practices and ensuring accountability among stakeholders.
Companies that prioritise good governance tend to outperform their peers. Because they are better able to meet challenges and seize opportunities. Therefore, good governance is not just about operational excellence. Good governance is fundamental to a company's continuity, economic stability and brand reputation. And so, it becomes a preferred partner in the business world.
Social: the human capital, beyond quotas
Social is more than gender, age, background or socio-economic status. Discussions about quotas and minimum percentages are totally beside the point.
Diverse teams are simply more innovative, resilient and adapt better to changing circumstances. They make for better decision-making and problem-solving. Diverse teams bring together unique strengths and perspectives, improving team performance and cohesion. Leading companies with diverse teams, such as large technology companies, solve complex problems and create products that appeal to a wider audience.
Investing in human capital means creating an inclusive environment where every employee can thrive and make a real contribution. In turn, it increases employee satisfaction, retention and better financial performance.
A study has already found that gender diversity (among other things) leads to better financial performance and less burnout. You will find the study in our download centre in Dutch and in French.
So, diversity is not only morally right, but it is also a business imperative.
Environment: climate action, short- and long-term benefits
Climate action is not just about the feel-good aspect of 'doing green'. Everyone agrees that protecting our planet is essential for us and our future generations. But it is also about smart and conscious use of energy and waste, leading to significant cost savings. Sustainable practices reduce environmental impact but also increase operational efficiency.
Investments in sustainable practices are necessary, the returns significant. Both in the short and long term. Companies that go along with it lower their energy costs, reduce waste and mitigate climate-related risks. They are also better positioned to meet regulatory requirements and growing consumer demand for sustainable products.
Forbes highlighted in an article that the cost of saving our world is surprisingly affordable. The real cost is inaction.
The benefits of sustainability are diverse
Embracing ESG (Environmental, Social and Governance) principles is not just a moral, but a strategic choice with tangible benefits. Corporate sustainability increases your profit opportunities, improves your market positioning and you make your company a magnet for excellent workers. By integrating ESG into your business model, you build a resilient brand, encourage customer loyalty and become a preferred partner for financial institutions and investors. ESG is the key to short- and long-term success.
Call to action
To reap the benefits, you first need to measure how ESG-fit your company is. How well does your company meet ESG criteria? If you know that, then you can also determine which parts could be improved. By monitoring key performance indicators related to environmental impact, social responsibility and governance practices, you ensure that your company is on a sustainable trajectory and continuously improving.
Equally crucial is the assessment of your business relationships. Understanding the ESG practices of your suppliers, partners and customers mitigates risks associated with non-compliance, lack of funding or reputational damage.
Your business may never become ESG-fit if your ecosystem is not. Regularly reviewing ESG data provides a comprehensive picture of the strength and weakness of your ecosystem so that you can make informed decisions that drive progress.
Practical approach
There are two ways to find out how well a company meets ESG criteria.
- 1. Interviews: where you talk to your customers or suppliers to get the necessary insights. It is very time-consuming and subjective because insights can be influenced by personal opinions.
- 2. The other way is data-driven: where you use figures and facts. Data-driven methods indicate how well ESG guidelines are being met. The approach gives you clear and objective insights on ESG performance.
Also download the whitepaper: How to meet the ESG guidelines in a data-driven manner?
Conclusion
By prioritising corporate sustainability, companies shape a better world for future generations. They also ensure immediate and lasting success in the present day.
Together, we can build cathedrals that will stand for generations, while reaping the fruits of our labour today. Let us dream of tomorrow but act today. By making decisions that are good not only for us, but also for those who come after us. This is how we embed sustainability at the core of our business practices and ensure a prosperous and just future for all.
Want to know how GraydonCreditsafe's data-driven approach puts you on the right track? Read more about our ESG Indicator here or request an immediate conversation with our ESG influencer.