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The Evolution Of ESG: Part 1 – Global Events and permacrisis

As industries developed globally and global trade increased, Sharon Myburgh explains why it became necessary to have globally agreed goals, targets, standards and qualities that would enable comparative analysis

Evolution of ESG permacrisis sustainability Sharon Myburgh
Sharon Myburgh holds a Masters degree in Urban & Regional Development, certificates in Project Management and Strategic Planning and various formal qualifications in energy and water efficiency, circular economy, carbon footprint, and data analysis.

So many entities, commercial, industrial and institutions, still ask questions about “why ESG”. Many view it as an additional administrative burden.

In this 3-part series, Sharon Myburgh sketches the development of ESG.

She explores explores the question how an entity can deploy it to its advantage because, at the end of the day, this is a win-win for finances and the circular economy, argues the Cape Town-based Sustainomics executive responsbile for carbon footprinting, energy audits and energy managements systems.

She has 30 years’ experience in impact assessments, more than 20 of which in consulting and has served on  various boards as non-executive director.

Today the first instalment in this 3-part series on the evolution of ESG.

The global playing fields 

No organism or entity exists in and of itself. It exists and operates in an environment. From  that it can be inferred that the entity impacts its environment as the environment also  impacts the entity.

Thus, as industry developed globally and global trade increased, it became necessary to have globally agreed goals, targets, standards and qualities that would enable comparative analysis.

The environmental angle made a significant contribution to raising awareness.  

In the 1970’s the effects of CFC’s on the earth’s atmosphere and the size of the protective  ozone layer attracted much scientific research.

Ozone and CO2’s have been studied in the  centuries before, and some of its qualities had been known, but real momentum was gained by what research in the 1970’s uncovered.

Scientists were alarmed about the effects on global temperatures as they started monitoring global warming and global dimming effects.  

In response to the scientific research and evidence, greenwashing became very popular and  companies who could afford it, invested significant amounts of money into marketing their  own “sustainability” and “produced lack of information” that proved their products did not  affect the natural environment and the livelihoods of whole communities.  

By 1987 the Montreal Protocol was agreed on and so started the reduction and phasing out  of the manufacturing of certain chemicals with high global warming potential and that have  been proved to contribute to the depletion of the earth’s protective ozone layer. 

Global events leads to permacrisis

Global events of the last 20 years have further contributed to disrupt the advancement of the  industrial revolution.

Volcanic eruptions, tsunamis, droughts – in the Americas, Africa, Australia and now even in Europe – the scarcity of natural resources (due to natural events and global political developments) have all impacted on the Risk Universe within which commerce, industry and other institutions have to operate.

A new word has been coined for  the current status quo re disaster management: Permacrisis. 

It is clear that we operate in a finite earthly environment with limited resources. New  innovations, especially advances in renewable energy technologies, taps into wind and solar  benefits, but also brings with it new challenges such as the need for storage of energy.  

The need for sustainable development became an internationally adopted goal.

In order to  achieve sustainability, one needs the necessary regulatory and organisational systems to  bring it about, otherwise not everyone will willingly participate. The EOLSS published an illustration of the complexity of such a system.  

Figure: The complex network of interactions between the fundamental dimensions of  sustainable development (source: Encyclopedia of life support systems, page 2. EOLSS  Mission. EOLSS Publishers. CD-Rom and 

Arie de Geus in The Living Company quotes a Dutch survey of corporate life expectancy in  Japan and Europe which came up with 12.5 years as the average life expectancy of all firms. 

“The average life expectancy of a multinational corporation – Fortune 500 or its equivalent – is between 40 and 50 years, says de Geus, noting that one-third of 1970’s Fortune 500  companies had disappeared by 1983.”

Such mortality is attributed by de Geus to the focus of managers on profits and the (financial) bottom line rather than the human community which  makes up their organization.

“Fix this, and you have discovered the fountain of youth,” De Geus wrote in 1997.

Tomorrow part 2 in this 3-part series on the Evolution of ESG: The Name of the Game is Sustainability.

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