The Emergence of ESG By Jennifer Cutaia, Vice President, Public Policy & Social Impact, Baker Hughes
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uilding a corporate responsibility framework can be an exhaustive undertaking. Change is a constant in the energy industry with technological innovation, mergers and acquisitions, new discoveries and markets, and improved operational efficiencies. Companies must factor another layer within these dynamics – the emergence of environmental, social and governance (ESG) as a performance indicator of responsible business practices. Although ESG has been a consideration within the investment community for more than a decade, its relevance to the energy industry is clear.
THE OLD WAY: CSR You are probably familiar with the internal grappling in years past of what corporate social responsibility (CSR) means for the sector and the process of rationalizing why an oil and gas company would voluntarily place 24
Energy Connection/February 2020
itself under public scrutiny, not to mention unnecessarily increasing the visibility of the services and equipment sector. Many wondered if integrating CSR reflected an industry jumping on a bandwagon to a fleeting campaign? Then again, some thought how would their company be perceived if they were the last of their peers to adopt CSR? Would not adopting CSR single an organization out?
EMERGENCE OF ESG In case you haven’t noticed, there has been a remarkable rise in ESG and the momentum is growing. Different than CSR, ESG brings a welcomed abundance of clarity for the energy industry. Coupled with our innate drive to solve hard problems, ESG means a more focused, collaborative effort on solutions to global priorities. Each important area of environmental, social and governance is highly visible as a core indicator to a company’s sustainable success. ESG solves the unnecessary confusion in CSR, which is sustainability and social responsibility.
