Both ESG and DEI should not be viewed as a cost center but as a profit center that has seen ... [+]
This is part four of a six-part series.
“We all share this American experience, whether [you’re] an immigrant like I am … or someone who has been here for four or five generations. We have similar stories and we have similar experiences and similar struggles. That nuance is important. And a brand needs to embrace that nuance in order to be able to be part of the dialogue and the conversation that takes place.” – Armando Azarloza, CEO at Axis Agency
These two acronyms get a lot of attention and spark a lot of questions and controversy today: ESG and DEI.
- ESG – Environmental, social and governance
- DEI – Diversity, equity and inclusion
While some try to turn ESG issues into more fodder for the culture wars, most recognize that commitments to doing good and to advancing inclusion are commitments to organizational growth. Both are crucial for the long-term sustainability for an organization.
This is part four of a six-part series on navigating uncertainty in business, healthcare and higher education. The articles in this series feature a blend of written content and short videos of individuals from across industries.
- Part one introduced the secret to navigating uncertainty: seeing change as opportunity, not as a threat.
- Part two addressed how uncertainty is forcing higher education to evolve.
- Part three looked at how uncertainty affects the workplace.
In this article, I’ll explore what leaders have to say about ESG, DEI, and how uncertainty affects their approach to those pursuits.
These insights were shared in Session 3 at the fourth annual Leadership in the Age of Personalization Summit, which took place in October at Clemson University’s Wilbur O. and Ann Powers College of Business.
From left to right: Armando Azarloza, Miriam Lewis, Angela L. Talton, Sal Mendoza, Fernando Duque ... [+]
Are ESG Investment Strategies Proactive or Reactive?
Travis Box is assistant professor of finance at Clemson University and an expert in statistical modeling and econometrics. He opened this session with a keynote about ESG investing, which refers to taking environmental, social and governance factors into account when making investment decisions.
He posed and addressed a few questions about ESG investing: is it proactive or reactive? In other words: when we make ESG-inspired investments, are we designing a portfolio that will actually help change the world through our investment choices? Or, are taking a more reactive approach? Are we designing a portfolio that's capable of responding to a changing world?
Watch this short video to hear insights from his research in which he and his team issued two identical bonds that were alike in every single way, except one was “green,” and compared the results. You’ll also hear about the different purposes of two approaches to ESG investing: one approach is divestment, and the other is engagement.
The Relationship Between ESG and DEI for Long-Term Sustainability
In the panel discussion that followed, leaders explored the importance of strategies for diversity, equity and inclusion (DEI) and discussed the trends shaping how organizations pursue these goals. They agreed that it is irresponsible to stop investing in DEI during tough times – and that organizational investments that are driven by DEI priorities can have a positive impact on the bottom line.
A lack of commitment to DEI doesn’t just harm a company’s efforts to be inclusive, it harms a company’s bottom line.
Armando Azarloza, CEO at Axis Agency, gets to the heart of why DEI is so important, saying that when a hundred million Americans identify as being non-white, you can't continue to market the same way you’ve been marketing. The new “general” market today is a multicultural market.
Sal Mendoza is vice president of diversity, equity and inclusion at NBCUniversal Media. But when people ask him what he does, he doesn’t say DEI, he describes his role as business development, community engagement, and building brand equity – because that’s actually what DEI is and does.
Fernando Duque, account director at the Coca-Cola Company, gave an example showing that when you make business decisions based on doing good, those decisions can put you on an unexpected path to success.
A few panelists gave some concrete examples of how to be more inclusive and gain new perspectives when making business decisions.
Angela L. Talton, senior vice president and chief diversity, equity and inclusion officer at City of Hope, talked about how healthcare providers need to be ready to serve diverse populations – and said community outreach is a critical component of a DEI strategy, because it allows organizations to listen to and focus on what the community needs (not just on what the organization wants to deliver).
Miriam Lewis is the chief inclusion officer at Principal Financial Group. She gave ideas about how to achieve this kind of inclusion in making decisions – tapping into the power of employee resource groups that can act as internal focus groups, and also the importance of starting with diversity on your board of directors.
Watch this short video for more insights from this panel of experts.
ESG and DEI create long-term sustainability for an organization – especially as we think about the ethnic makeup and the priorities of future generations.
I’ll explore that topic in part five of this series, where we’ll look at how universities and employers need to adapt to meet the needs and desires of today’s students – our future workforce.
