{"id":46326,"date":"2024-12-18T08:06:07","date_gmt":"2024-12-18T08:06:07","guid":{"rendered":"https:\/\/my.legal500.com\/developments\/?post_type=legal_developments&p=46326"},"modified":"2024-12-18T08:06:15","modified_gmt":"2024-12-18T08:06:15","slug":"esg-business-ethics-and-reputation","status":"publish","type":"legal_developments","link":"https:\/\/my.legal500.com\/developments\/thought-leadership\/esg-business-ethics-and-reputation\/","title":{"rendered":"ESG, Business Ethics and Reputation"},"content":{"rendered":"

ESG (Environmental, Social and Governance) is undoubtedly one of the most important issues of recent times and a trend gaining momentum in the face of concrete global challenges.<\/strong>It will certainly drive regulatory developments and corporate governance activities in the future.<\/span>[i]<\/a> ESG, which refers to \u201cenvironmental, social and governance\u201d has come to play a vital role in corporate governance in recent years. ESG practices have led companies to act responsibly and ethically while conducting their activities and making decisions. In a sense, the perception of ethics has created a framework in which stakeholders such as consumers, investors and employees can monitor and audit if an undertaking is<\/span> \u201cdoing the right thing even when no one is looking\u201d<\/em>. It also contributed to translating individual ethical values into companies\u2019 business ethics policies. In the words of BlackRock Chairman and CEO Larry Finn:<\/span><\/p>\n

\u201cSociety demands that both public and private companies serve a social purpose. To be successful over time, every company must not only be financially successful, but also be able to demonstrate how it makes a positive contribution to society. Companies must benefit all stakeholders, including shareholders, employees, customers and the communities in which they operate<\/em>.\u201d [ii]<\/a><\/p>\n

As a matter of fact, companies that adopt ESG practices recognize that the structure in which they operate has the power to influence society and the environment and, in a sense, present a declaration of will to use this power and influence positively. These factors, which bring together themes such as sustainable use of resources, combating climate change, reducing carbon footprint, giving back to the community, and focusing on protecting consumers and employees, along with transparent, accountable, and ethical leadership, are a way of integrating the ethical-based will of the relevant company to give back through declaring that \u201cenvironmental, social and corporate governance elements are essential elements for them\u201d.[iii]<\/a> Thus, it is evident that some important ethical questions such as the following need to be answered when determining a company\u2019s ESG direction.[iv]<\/a><\/p>\n

 <\/p>\n\n\n\n\n\n
Environmental<\/td>\n\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What are the company\u2019s practices regarding climate change?<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What is the waste and recycling policy?<\/td>\n<\/tr>\n

Social<\/td>\n\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 If the company is winding up, at what stage should employees be informed?<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Can an employee known to need a job be offered a lower salary?<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 At what point shall our defective\/lost products considered to be withdrawn?<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 How much of the budget should the company allocate to social responsibility projects?<\/td>\n<\/tr>\n

Governance<\/td>\n\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What is the Board of Directors\u2019 perspective on ethical culture?<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What is the attitude of senior management and the Board of Directors towards accountability?<\/p>\n

\u00b7\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 What is the company\u2019s policy on whistleblower employees who report irregularities?<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

It is clear that ESG practices provide other advantages for a company besides following ethical values. These advantages can be can be summarised as follows:[v]<\/a><\/p>\n