29 Jan 2024

Doing right for the planet… and its people (Part 3)

Open the pages of most, if not all, business publications and you could bet your house on there being at least one article talking about the importance of ESG (environmental, social and governance) for businesses.

Indeed, according to research we undertook, the term ‘ESG’ was referenced a staggering 62,000 times in the UK media during the last six months of 2023. A zeitgeist? Absolutely not. ESG may have gained prominence during and immediately after the COVID-19 pandemic, but it has more than found its feet ever since. ESG in business is more than a moment, it is now a movement that is gaining greater momentum and fast-becoming a business imperative.

So, what makes it so important to businesses and why should organisations get on board with implementing an ESG policy?

To answer these questions, we wanted to break down the E, S and G into separate entities. In Part 1 of this three-part series on ESG, we discussed the ‘E’ (Environment) element. Part 2 covered the second part of the equation, the ‘S’ (Social). What follows here is a focus on arguably the most important, yet often overlooked aspect – ‘G’ for Governance – the linchpin that binds all three elements together,

Value creation
According to a report compiled by McKinsey that considered the results of more than 2,000 studies on ESG, a clearly defined ESG proposition generates significant returns for businesses in five key ways:

  1. Top-line growth with other ESG-led businesses actively seeking out others ‘just like them’ to partner with
  2. Cost reductions because of measures implemented, such as lower energy consumption and switching to renewable alternatives
  3. Greater access to funding to fuel growth via government-backed schemes and subsidies
  4. Productivity boosts fueled by heightened employee motivation and a strong employer brand that attracts new talent
  5. Enhanced appeal as a sound investment proposition

Against this backdrop, it is clear why Governance really matters. To build any kind of resilient and sustainable business, the right structures, processes, and practices that guide a business’s decision-making (and behaviours by default) must be in place. These are the things that ensure the business is transparent, accountable, ethical and, above all, adheres to legal and regulatory standards.

This all sounds good in theory, but the challenge that we faced was how to make these work for the business in a practical sense.

Getting employee buy-in
When we started out on our journey to become a B Corp in 2023 [see our article in Business Leader magazine], we made some key strategic changes to every aspect of our business model. So, we needed our people to see and understand how every process we have in place reflects Monahans’ broader purpose.

Take our recruitment policy as a case in point. Governance plays a crucial role in ensuring that Monahans address social issues responsibly. This includes aligning our corporate objectives with our people policies in relation to diversity and inclusion, social mobility, and simply creating a forum for employee feedback.

It is this latter point that has been key to the success of the Governance element of our own ESG policy.

Creating a continuous feedback loop
The London Business School has shown that “employees with a sense not just of satisfaction but also connection perform better.” This is our experience, too.

It’s all about communication. We don’t profess to have all the answers and to be the almanacs of ESG policy. Far from it. But with constant feedback from employees on how we can improve, real value is added to the process and long-lasting change can happen and is more likely to meet or even exceed expectations.

As we stated at the top of this article, Governance is very much the glue that holds the Environmental and Social elements together. At time of writing, Monahans is pending B Corp status, and, in some way, it is immaterial whether we gain certification or not. That’s because we are a business that has already committed to ethical, responsible, and transparent practices – gaining accreditation will simply be the proverbial cherry on top of an already iced cake.

By prioritising strong governance structures, Monahans is best placed to support other businesses looking to follow their own ESG journey, whilst ensuring that we can mitigate risk and create sustainable value and long-term growth.

If you would like further information or have any questions on Monahans’ ESG policies, please contact one of our HR team today.

Sophie Austin