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#InsightsIn5: The necessity of a GLOCAL perspective


Jenna Rowe

4xi Advisor, Sustainability


The combination of Global perspectives and Local execution is a powerful concept that when together can drive a whole host of benefits to people, economies, and positively impact the planet too!


A significant number of Environmental and Social Shareholder Resolutions with majority shareholder support have been passed in 2020, demonstrating the increase in investor focus on environmental, social, governance (ESG) as a priority. ESG factors into debt & equity, with more than 90 country exchanges joining the Sustainable Stock Exchanges Initiative (SSE) and creating ESG indexes to promote greater coherence, consistency and comparability in corporate reporting.


Shareholders and other stakeholders are paying close attention to the details. Investors and talent alike, are carefully evaluating companies by their position, reporting and performance, and overall approach to demonstrating corporate responsibility. Few stakeholders state expectations as clearly as BlackRock’s CEO:

“A company cannot achieve long-term profits without embracing purpose and considering the needs of a broad range of stakeholders.”

While a company’s industry, geography, complexity, and leadership influence the organization’s commitment to environmental sustainability and their approach, more companies are defining clear ESG priorities as part of their overarching corporate business strategy. Key to this effort is disclosing sustainability information in their financial filings such as annual reports, Forms 10-K, and proxy statements.

This is a clear indication of the growing acceptance that sustainability information is material to investors. This shows companies are paying attention and adapting to increasing expectations from stakeholders.

Purpose Driven Position

The most successful companies are those taking a “GLOCAL” position, meaning they “Think Globally and act Locally.” Through this Glocal perspective, individuals and companies can drive greater positive impact, especially in the areas of environmental and social responsibility.

The overwhelming number of sustainability organizations, reporting standards and frameworks that have emerged in the last decade have created confusion for firms beginning their sustainability or ESG journey and articulate their purpose.


Though daunting, a glocal perspective simplifies the decision process by narrowing the options from the top down using three pivotal criteria to define potential pathways to defining their corporate responsibility position:

- Adopt a Globally Applicable set of principles, and commit. 
- Define Regionally Relevant, quantifiable, time-bound goals which align with your commitment, address stakeholder expectations, such as reporting, and are compliant with the industry and regulatory requirements where you operate.
- Develop a strategy that is Locally Actionable and provides measurable benefit to key stakeholders, such as employees, tenants, and the communities in which you operate. 

When defining a purpose driven position, follow the money. One recommendation is following it to Davos, Switzerland, the site of the World Economic Forum’s (WEF) annual meeting. The WEF hosts political and economic leaders, climate activists, royals and reporters, all focused on sustainability. Totaling 3,000, WEF participants include business leaders, the CEOs of global companies, NGOs, Labor organizations, Business Associations, and Academics. This year’s meeting launched the Davos Manifesto 2020, a bold statement defining the “Purpose” of a company:

“Engage all its stakeholders in shared and sustained value creation. In creating such value, a company serves not only its shareholders, but all its stakeholders – employees, customers, suppliers, local communities and society at large.”

This particular pathway to purpose also aids in identifying sustainability principles, as the WEF runs alongside the United Nations General Assembly, and many WEF members are also participants in the United Nations Global Compact (UNGC). The UNGC’s aims to mobilize a global movement of sustainable companies and stakeholders, supporting companies to:

  1. Do business responsibly by aligning their strategies and operations with Ten Principles on human rights, labor, environment and anti-corruption, and;

  2. Take strategic actions to advance broader societal goals, such as the 17 UN Sustainable Development Goals with an emphasis on collaboration and innovation.

Globally Applicable

Regardless of size, industry, complexity, and geographic coverage, all companies can contribute to the Sustainable Develop Goals. Global issues – ranging from climate change and natural disasters to water scarcity and food waste, from social conflict and inequality to pollution and loss of biodiversity – need solutions that the private sector can deliver. This broad array of challenges represents a large and growing market for business innovation and collaboration.

Since January 3rd of this year, more than 2,000 new participants have committed to the U.N. Global Compact Sustainable Develop Goals (SDGs). This has brought the total to more than 15,500 organizations, despite the pandemic, and the number grows almost daily. No other organization or universal set of principles, has gained this magnitude of support and this level of participation and support.

Regionally Relevant

While the SDGs are universal, individual countries establish and enact national plans for achieving the global goals. The Global Compact has launched Local Networks in over 85 countries, providing the platform for businesses to engage with stakeholders from Government, the UN, civil society and communities to design a shared approach. This type of collaboration provides another benefit, which is ensuring that participating organizations have a voice in developing national policies and the regulatory requirements to which they are held accountable.


On the regulatory front, a strong push for corporate sustainability has come from Europe. The European Union Directive on non-financial and diversity reporting, passed in 2014, requires large public companies to include a sustainability statement in their annual reports. Other countries including South Africa, the United Kingdom, Japan and India have also taken steps to require different forms of sustainability disclosure for public companies.


Regulatory reporting requirements, alongside the developments in the investment community, are driving the need to address, and improve disclosure of, sustainability issues deemed material to companies’ long-term health. Over 90% of GRESB participants now have multiple ESG objectives that are fully integrated into their business strategy.


Meanwhile, the non-profit CDP, which encourages transparency around corporate ESG performance, launched a 2020 Non-Disclosure Campaign. This initiative is driven by global investors, holding more than $10 trillion in assets, who are urging corporations to improve their environmental disclosure on the themes of climate change, deforestation, and water security.

The 1,051 companies from 49 countries being urged to share environmental data are estimated to emit more than 4,800 metric megatons of carbon dioxide equivalent annually, according to CDP.

Locally Actionable

Just as stakeholders are one of the drivers behind a company’s need for an ESG program, stakeholders require purposeful communication and engagement. In fact, stakeholder engagement is both a requirement for most principles and disclosure frameworks, as well as a key element to a program’s success. More recently termed “experience” and focused on employees, effective engagement efforts can help a company gain a competitive edge, improve brand and reputation, increase their market share, and boost shareholder value.


The importance of stakeholder engagement is such that the SDG library includes an entire section on the topic. Emphasizing the “Social” in environmental, social, governance, best practices align human resources, public relations, philanthropy, community, and sustainability efforts through employee participation to maximize an ESG program’s return on investment and the value delivered through the program.


In addition to benefits such as compliance with local regulatory requirements, community engagement also provides opportunities for collaboration across multiple corporations, non-profits, industry organizations and utilities. This collaboration is where opportunities for driving community benefit through corporate actions can begin to gain the most traction – integrated into each organization’s efforts in partnership. Trash pick-up days, e-waste recycling, local education and green events, all deliver measurable results to enhance reporting and are built on stakeholder participation, which delivers other valuable metrics – all in support of achieving ESG program goals and meeting corporate responsibility commitments.

Conclusion

Integration is the keyword when it comes to sustainability or environmental, social, governance efforts. These initiatives must be reinforced by the implementation of company policies, standards and guidelines which are integrated into the culture of the company and embedded in their business operations.


No matter your organization’s current progress or lack of progress in this area, the time to act is now. Proactively assessing the situation, defining your purpose, and developing a strategy is efficient and effective. Reactively responding to pressure from government and stakeholders is expensive - and exhausting.


What Next?

Sustainability is a complicated and complex puzzle, but if your shareholders, stakeholders, and your own principles, are committed to making a difference, let 4xi Global Consulting help you navigate the unknown, and discover new horizons.

Jenna Rowe, Advisor, Sustainability & Resilience at 4xi Global Consulting offers insights, guidance, and programmatic support for organizations who are seeking to drive their sustainability efforts, make a change, and create impact in how they operate and achieve their sustainability goals for the future.


To learn more about how 4xi can help, contact us today:

w: www.4xiconsulting.com e: jennarowe@4xiconsulting.com

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