As a framework for companies, environmental, social and corporate governance (ESG) is a basic duty of businesses. While environmental protection is constrained by environmental regulations and international conventions, and corporate governance is supervised by a board of directors or supervisors, social responsibility is less easily quantified.
If carbon reduction is included in the cost of production, businesses might pass on the costs to customers, which is not a good deal for them.
What the public cares about is how companies take their social responsibility, but most corporations downplay this aspect, merely throwing out concepts and conducting superficial exercises such as cleaning beaches or implementing neighborly actions, and taking photographs to show that they are doing their bit.
I know of a chemical plant that has long been a subject of social protests because of its discharge of pollutants and its failures to shoulder social responsibility.
Although the owner of the factory promised to improve the situation and said the firm had met ESG requirements, the statements did not ring true.
If ESG becomes a superficial edifice in the same way as the International Organization for Standardization has, businesses might initiate their own quality management system, produce reports in English and Chinese, file them and forget about them.
ESG reports are mostly focused on what corporations can do to meet ESG policies instead of how they do it, making ESG words without action.
Corporations should start with governance, specifically illustrating what they do to achieve environmental protection and social responsibility instead of offering mere platitudes, providing a feasible and verifiable approach.
Perhaps incorporating ESG practice into the indicators of green banking — offered by the Financial Supervisory Commission — can ensure implementation.
However, that would only be applicable to listed companies with capital of at least NT$2 billion (US$62.3 million).
Everyone should think about how to implement ESG at every corporation, non-profit and government agency.
Chen Wen-ching is an executive director of the Formosa Association of Resource Recycling.
Translated by Chien Yan-ru
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