AN ESG Q&A WITH IRLABS

The investment decisions we make today will have a profound, lasting impact on our economy, our environment and our quality of life for generations to come. Environmental, Social and Governance (ESG) topics are increasingly top of mind for investors, stakeholders, customers, employees and communities. This is essential to strategic planning, risk management and investment decision-making. Whether you have an ESG program or not, there’s always a place to start or refine.

For many companies, developing and delivering on an ESG strategy requires strong partnerships and experts who know what they’re doing. Paige Strand, irlabs’ Director of Marketing & Communications, sat down with irlabs’ Principal and Co-founder, Alyssa Barry, to discuss all things ESG.

Paige: For anyone new to ESG, what does ESG mean?

Alyssa: ESG can mean several things, though they often link together. From a community, future-focused perspective, ESG is the essence of community and ethics, how we can enhance our communities from an environmental, sustainable, inclusive and human perspective and how organizations take accountability and action in this. From a financial perspective, it can be about an elevated way of doing business and ensuring better returns. A stronger, healthier community often leads to a stronger local economy, and a stronger local economy can positively contribute to the health of a community. It’s about the connection between better business and better living. This is why irlabs typically selects clients with ESG strategies or the desire to build them.

Paige: What is it like to be working with clients who regularly focus on ESG?

Alyssa: I’ve had experience consulting several clients through their ESG strategies over the years. I often say “I was doing ESG before ESG was an acronym.” From corporate governance policy, social and sustainability initiatives – it’s about thinking thoughtfully about the impact your business has on all stakeholders it serves. It’s a very important topic in the market regardless of industry, and it’s only going to increase as regulations are introduced.

Paige: You mentioned ESG regulations, are these on the way?

Alyssa: It’s a process and it depends on the industry. Where we’re seeing it the most in the investment industry is with institutional investors and fund managers adopting ESG criteria. The challenge for companies is that the criteria will vary across the board, which means more time, energy and effort in meeting and serving multiple criteria sets; it’s not cohesive. These are indicators of ESG’s importance and that regulations are likely coming soon, but it is taking time. There’s a need to get on board proactively, not just to appease regulations, but to remain competitive in the marketplace and ensure your market evaluation is being included rather than passed over. There’s still a long way to go, but getting ahead is important, especially when it benefits the community.

Paige: Why now, why does it seem like ESG is only coming to the forefront so significantly now in recent years?  

Alyssa: Consider this like an evolution. The previous version of this for the longest time was the “CSR” or Corporate Social Responsibility. This has many differences with ESG, but in a nutshell, CSR was focused on how to be a good corporate citizen, which became a corporate social responsibility mandate. There would often be a CSR tab on websites, sharing focuses of how to protect or contribute to communities. In recent years, this evolved more when climate change conversations emanated more, like the Paris Agreement years ago.

Paige: That’s the “E”, what about the “S” and the “G”?

Alyssa: Well, a lot of it did start with environmental focus, but several important topics entered the conversation that boards and leaders were compelled to focus on. With the rise of Black Lives Matter, a lot of dialogue began around DEI – diversity, equity and inclusion. And then there’s governance factored into the conversation, where you have leaders and boards who are responsible for handling these areas. There’s been added focus on board diversity, like with Women Get On Board. There’s been pressure created for Boards that are not contributing or being active enough in preventing crises. We also have social media now, which encourages more public conversations and keeping public figures and companies accountable for their actions.

With ESG becoming more top of mind, irlabs is further committed to developing and supporting ESG strategies for our clients, while participating in important conversations to advocate in our industry. Should you have any questions or would like to learn more, contact happyinvestors@irlabs.ca!