Diversity and inclusion are tightly interconnected with ESG as they often are systemic drivers 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.
What measures do companies need to put in place to take a serious and genuine stance on diversity and inclusion? Firstly, benefits are realised only if true diversity AND inclusion are embedded in organisational DNA. Diversity means 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 and include not only gender or race diversity but also the diversity of culture, education, location, generation, and thought.
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 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 actions and words, and visibly not tolerate those who do not.
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. Stakeholder and customer values often 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 vital components of innovation, problem-solving, and system thinking needed to develop new, more socially and environmentally acceptable products and services in line with emerging customer requirements.
They are also crucial in dealing with risk, both positive and negative. Leading value or purpose-driven companies require different leadership and managerial styles, one willing to take calculated risks to ensure a competitive edge. Diversity and inclusion also enable better problem solving and innovation. This way, strategy and operations benefit, further boosting ESG performance by recognising problem areas early on and dealing with them proactively. Governance also helps 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 positively contribute to navigating our increasingly complex world and ensuring continual improvement in ESG performance and ESG centred growth.
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