Disease: Corruption. What is the Treatment?

“The good physician treats the disease; the great physician treats the patient” - Sir William Osler

What is ESG?

ESG- E stands for environment, S for social and G for governance - refers to an approach inculcated by organisations to evaluate its works on behalf of social goals that go beyond the role of maximising profits. They are the 3 components that come under the lens while evaluating the intent of social good.

Expanding on ‘G’ of ESG

The ‘governance’ component in ESG is associated with the decision-makers of the organisation ranging from the composition of the Board to its policies and values.  This component has special weightage since it forms the very basis for all activities of the organisation – management of the business, corporate social responsibility, sustainability activities as well as utilisation of its resources. The governance component plays an important role in how the social and environmental component is worked on, measured and evaluated.

The Need for Proper Inspection

The United Nations (UN) states that, to fulfil all the 17 goals it had set for countries to ensure sustainable development, a crucial part is from ensuring lack of corruption. Corruption is the main evil that stops us from fulfilling the other goals by 2030. The issue of corruption would most likely occur in the governance component of ESG and hamper economic growth, increase poverty, and deprive people of basic resources.

Corruption Affecting ESG

Corruption can have damaging effects on organisations, governments, and society. According to Transparency International, a global business intelligence company, corruption costs USD 2.6 trillion per year globally- that’s 5% of the global GDP! It furthers the economic gap that exists in society and ensures an unequal distribution of resources among people.

What are the Possible Solutions?

The easiest solution is to practice zero corruption and to ensure this we need provisions for ‘decision-makers’ to be more transparent, accountable, and responsible. Research shows that director nominations and elections increasingly affect sustainability within the organisation and ensuring all levels of employees have a part in decision-making improves transparency, accountability, and responsibility among the board members.

Apart from these, there is a need that these policies and documents to be drawn up and adhered to.

1. Code of Business- addressing the business ethics, and compliance practices designed to prevent corruption or bribery.

2. Risk and Crisis Management- addressing the risk management practices, identifying short-term and long-term risks, and the mitigation efforts.

3. Tax Strategy- addressing the policies on taxation issues and the risks associated with the practices.

4. Impact Measurement- addressing the social responsibility activities, social investments, and the evaluation process.

5. Human Rights Risk Management- Addressing the rights of employees, informing them about the activities of the organisation and the risks associated.

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