Diversity and inclusion have become increasingly important considerations in the corporate culture in their own right and have in parallel become key issues in the ESG (environmental, social and governance) debates and processes. Diversity and inclusion are tightly interconnected with ESG as they often are systemic drives of many other issues that impact and influence. There is overwhelming evidence that diversity and inclusion are good for business in general and ESG performance, by boosting profits, driving innovation, setting robust strategies, improving problem solving capabilities and enabling growth.
But how are these benefits realised? What measures do companies need to put in place to ensure they take a serious and genuine stance on diversity and inclusion? Firstly, all of these benefits are realised only if true diversity AND inclusion are embedded in organisational DNA. Diversity is ensuring that all the varied differences in humans are recognised and not used to discriminate against anyone and through inclusion, ensuring that these principles are embraced. Diversity must be broad based in nature and include not only gender or race diversity but diversity of culture, education, location, generation and thought, amongst other things.
Secondly, if broad, diversity can ensure that a wide variety of points of view and knowledge can help shape company strategy, identify new markets and find new ways of work. It cannot however be a number driven process. Diversity cannot help realise these benefits unless it is coupled with true inclusion. In other words, these diverse views and knowledge must be listened to, valued and most importantly, utilised. Company culture and leadership styles will set the level of inclusion. Leaders need to actively promote diversity and inclusion through their own actions and words and visibly not tolerate those that do not.
So why is this important for ESG? Firstly, our stakeholder and customer bases can be very diverse and if employees do not reflect that same diversity, stakeholder issues and customer needs may not be identified. It is stakeholder and customer values that oftentimes determine if they will invest or buy specific products. Environmental and social issues are strong motivators in value systems and damage to reputation and the bottom line may result if these values are not understood and incorporated into company strategy.
Diversity and inclusion are also very key components of innovation, problem solving and system thinking which is needed to develop new, more socially and environmentally acceptable products and services, in line with emerging customer requirements.
They are also key in dealing with risk, both positive and negative. Leading value or purpose driven companies require a different leadership and managerial style, one that is willing to take calculated risks to ensure a competitive edge. Diversity and inclusion also enable better problem solving and innovation so that not only strategy but also operations benefit, further boosting ESG performance by recognising problem areas early on and dealing with them proactively. Governance also benefits as senior leadership is responsible for dealing with strategy and risk through ExCo and Board Committees and other governance processes.
It is essential that we fully embrace diversity and inclusion to help navigate sustainable paths forward with productive and engaged people as the basis for growth. Diverse teams, leadership and boards will have a very positive contribution to navigating our increasingly complex world and ensuring continual improvement in ESG performance and ESG centred growth.
By Wendy Poulton, CEO of Strategic Mindsets and one of the co-founders of the ESG Africa conference, which will take place from 31 August-1 September 2022, at the CSIR in Pretoria. For more information about this event, you can visit the website at www.esgafricaconference.com or contact the organisers at joshua@esgafricaconference.com