Sustainability and corporate morality, where and where from 

About GEM Monitor

In a complicated juxtaposition of several crises – firstly, the war on the continent, and the post-pandemic economical crisis – who would care, you would have rhetorically asked yourselves, about ESG (Environment, Social and Governance)?

Well, a lot of us care and soon enough everyone will care.
Starting from the premise that not everyone is familiar with the concept – ESG represents all the actions that an economic actor takes for what we can generically call a better world, beyond the logic of profit (and not against it). In public discourse, almost all aspects of the ESG sphere are generically and often superficially brought together under the conceptual umbrella of sustainability.

The environment within ESG means what you are truly doing to reduce the negative impact on the environment under which you, the company that must make profits, have through your existence, products, services, and decisions.
Social in ESG stands for everything you do so that all people in your universe – employees, customers, community – have a better and fairer life.

Governance in ESG is an ethical compass in your role as an economic actor – how well, fairly, morally and for the public interest you make decisions meant to (also) bring you profit.

ESG, a shield for green- and pink- and white- and other types of washing. ESG mandatory reporting is a must- and it’s here.

We don’t think it’s necessary to define greenwashing, whitewashing, redwashing and the other “color-washing” that have been imprinted onto the public consciousness throughout the last decades. Due to the fear of public pressure and for the sake of a clean image, too many social actors have practiced different types of public image washing, using vague or incorrect information, ambiguous messages, partially checked or even purely dishonest, and so on. A good part of the lack of public trust and the general trend for people to doubt anything (with harmful effects on society) comes because of politicians, companies, brands that you loved on the store shelves or famous NGOs were, rather, worse than the moral police, lying and deceiving to attain their goals.
This practice of “washing” their image from their colossal mistakes (and the capital) is coming to an end – at least in the economically developed areas and surely in the European Union. That is because, starting January 2023, CSRD (The Corporate Sustainability Reporting Directive) has entered into force.

Shortly, starting next year, with applicability in 2025, tens of thousands of publicly listed European companies (around 6000 active companies in Romania), mainly big companies, as well as IMMs and start-ups, will have to transparently and verifiably present everything they do to better their activity in terms of sustainability growth. In other words, ESG reporting (also called non-financial reporting) is not only becoming mandatory, but also a public evaluation criterion, in terms of morality and investments. Numbers and facts do not lie and can no longer be embellished just from words. And everything that is measurable is also evaluable.

GEM Monitor and the evaluation of ESG reporting transparency. Moral scopes with a financial impact

The network of independent communication agencies, which Free Communication is also part of, has developed an instrument in the last few years that accurately measures and precisely evaluates how transparent, clearly, detailed and sincerely big actors communicate what they are truly doing for a better tomorrow. It is called the Global ESG Monitor (GEM), and at the end of last year the second global report was published, where non-financial reporting of 250 major listed companies throughout Europe, USA, Australia, and South-Eastern Asia are analyzed. And more relevant on the local scale, the first GEM report for Romania was published last month (which, shortly, demonstrates with no doubt that the Romanian economical landscape is, from the sustainability perspective, at the beginning of its time and not at all easy).

GEM is relevant on a global scale and is becoming a well-known evaluation standard for transparency in this type of communication. This comes because of the meticulousness and preciseness of the evaluation criteria, as well as the complexity of the process itself. To be blunter, you won’t get to say “I, company X, bought three electrical vehicles, we have reduced our carbon footprint in who-knows-what way, we have two women on board and five colleagues with disabilities in the client service department and done, we have made the world a slightly better place”. NO. You, as a company, must go into detail with these things, backed up by verifiable data, in the annual report that the European Commission asks you to compile. GEM will evaluate this report and will give it a score from 1 to 100. Score that will not only matter for the public, as the Michelin stars do for a respectable restaurant – this will matter to shareholders, investors and, maybe most importantly, to you, the company, in hopes of being better with the people around you and more economically, socially, and financially sustainable on medium and long term. GEM evaluation is rather a tool for companies to educate their activity, steering away from being silent and leaning towards transparently sharing their numbers.

Evaluating transparency in communicating sustainability efforts can – and should – be not only a legal obligation, a “burden” to take off your shoulders to please some investors, to look good for clients and to not have problems with the law. It should be – and we hope it will be – a moral obligation of any “member of the city” that produces something and uses resources for that. Whether that “something” means that you bottle water, beer or soft drinks, you refine petrol, loan money, transport people or goods, etc. That “something” is, ultimately, something made by people for people, and people, each and every one of us and all of us together, should be more responsible with each other and the world in which we live.