The UN Global Compact developed the notion of 'ESG,' which stands for Environment, Social, and Governance, as a performance metric for enterprises aiming for sustainable growth.
ESG has a strong connection to corporate sustainability and Corporate Social Responsibility (CSR), and it goes beyond traditional profit and loss calculations. Through ESG, businesses may examine and balance their positive and negative economic and social consequences, resulting in commensurate visions, plans, and actions. This improves company CSR scores and reputation, assisting investors and institutions in evaluating risks and opportunities. This is precisely the context for corporations preparing ESG reports. However, whether actual implementation aligns with this vision, a recent incident I witnessed might reflect some gaps between ideals and reality.
A Disturbing Service Experience
On a casual morning, right before the bustling lunch hour, I passed by a fast-food chain restaurant. When I saw that it wasn't busy, I went in for an early lunch. My meal was however marred by an unpleasant incident. A father and daughter sat next to me; the older man needed his daughter's help to sit. The daughter wanted to introduce her father to the restaurant's meal delivery service so that he wouldn't have to fetch food himself. However, their food didn't come as expected till the daughter asked. However, one of the staff members harshly said, "You have hands and feet, why not fetch it yourself?" making them feel embarrassed. The idea of food delivery was commendable at first because it provided a more thoughtful dining experience, However, this unpleasant experience has made me question the company's service!
ESG is being used as a Marketing Tool
On that particular day, I happened to be seated nearby and witnessed an unpleasant incident. Driven by curiosity, I sent an email to this chain restaurant, describing what I had observed and inquiring about how they handle such situations in accordance with ESG principles. However, the company's response lacked a proper customer feedback handling process and did not address the social service aspect of ESG. Such a response has increased my doubt regarding the company's genuine commitment to incorporating ESG principles into their business practices.
Although ESG is now mandatory for listed companies in Hong Kong, most employees are still unaware of it. This experience has raised some doubts about whether some businesses are truly integrating ESG into their business operations or are just using it as a marketing tool. That being said, even without ESG principles, customer service should not be neglected to such an extent!
Filling the Gap: Key Considerations for Comprehensive ESG Implementation
For many businesses, ESG initiatives are still in their infancy, with a strong emphasis on environmental issues. For instance, this chain of fast-food restaurants emphasizes the avoidance of plastic utensils and even makes charitable donations, which are positive directions. Their focus on customer service and inclusivity, though, is equally crucial. Genuine ESG implementation should involve and respect all stakeholders. Delivery service is one of the voluntary services offered by this fast-food restaurant, but its operation appears quite disorganized, and it seems that employees have not been properly trained in respecting customers. It might even be a possible violation of anti-discrimination laws based on that staff member's comments.
Beyond Environmental Concerns: Social Aspects and Corporate Governance
For comprehensive ESG implementation, companies must consider social factors and governance, not just the environment. This incident highlights the importance of defining such integrations.
When drafting ESG reports, conflicting interests among stakeholders on value creation and prioritizing issues pose challenges. To address these, businesses must balance interests, seeking suitable approaches to resolve conflicts.
Transparency and Accountability: Essential Corporate Governance Practices
Transparent corporate governance practices are essential for ensuring accountability and building trust. This incident highlights the need for the fast-food chain to strengthen its governance mechanisms and make timely improvements in its services. When assessing a company's commitment to implementing ESG, several important factors must be considered in addition to surface-level advocacy:
Social Factors: Companies should invest in staff training and benefits, fostering an inclusive environment where customers of all backgrounds feel respected.
Governance: Transparent governance structures are crucial. Companies must establish clear customer feedback mechanisms, reflecting their commitment to accountability and responsiveness.
Communication: ESG initiatives should engage all stakeholders in decision-making. Effective communication with customers in the F&B industry is essential for enhancing brand image and reputation.
Commitment: Companies must demonstrate long-term commitment to sustainability and social responsibility, not merely adopting ESG for marketing. By aligning actions with ESG principles and integrating them into strategic plans, companies can establish sustainable business models.
Conclusion
ESG is an essential metric for evaluating a company's sustainability initiatives, not just a term used to simply mean "sustainability." The fast-food chain issue, however, highlights a discrepancy between the company's claimed ESG goals and its actual actions. Businesses must make sure that their activities are in line with the stated ESG objectives in order to fill this gap. They must also effectively integrate ESG into their strategic planning and operational procedures in order to build a long-term business model that will win them wider public acceptance and support. It is important to note that improving interpersonal relationships, encouraging greater imagination and creativity, and increasing feelings of inclusion and happiness are all in line with the UN's "Leave No One Behind" principle.
Author: Emily S. Wong, Certified ESG Planner - ICSD
This article is included in "ESG - An Illuminating Journey," a book put together by ICSD. The book offers a range of articles about ESG issues, written by Certified ESG Planners from different fields. If you're interested in learning more about ESG, we suggest buying this book.