Nov 10 / Karina Mereuta

Expert Corner - Discussion with Katja Rieger, Founder of RippeEffect on how to deal with the 'S' from ESG

Having worked across 5 continents (Europe, Asia, Australia, US and Africa) mostly for GE and Swiss Re, I have become invested into ESG, because it is the foundation for sustainable businesses, that are profitable, responsible and have a positive impact.

Helping organisations on this journey is my privilege. "

Q1: Katja, you have been trainer for companies and teams and you have been working hands on to empower leadership towards change. Where do you see most resistance? And least resistance as well?

A1: It is quite interesting that on the one hand there is more and more evidence, that proves, that good leadership and responsible organizations perform better. Yet the reality, the every day workplace does not demonstrate it (yet?)

Good leadership today is defined as appreciative, empowering, safety providing and inclusive, to name just a few important traits. It stands on contrast to a transactional, controlling, hierarchical approach.

Most leaders I speak with would like to be such a leader, yet sometimes they don’t know how, more often they fall back into old behaviours like controlling or blaming without being aware, because the feedback culture, especially up in the hierarchy, is lacking.

In many surveys how leaders see themselves and how they are seen differs in quite some percentage points. The same applies to states sustainable goals and the day to day decision making. Everyone embraces sustainability, but when there is a dilemma we fall back on what is safe and has always been the goal: short term profit.

A simple solution for his is to foster safety to create transparency and an active feedback culture.

Q2: I know that you are a promoter of neurodiversity as a “niche” of diversity & inclusion. What is your personal experience with the benefits of neurodiversity for companies?

A2: Neurodiversity, a personal passion of mine, is a movement that embraces people who are cognitively different like autistics, dyslexics, people with ADHD.

It states that:

differences are a fact of life and neither bad nor good initially
the differences sometimes come with challenges and barriers that need to be overcome. And they come with strengths that benefit us all. Especially with regards to the skills of future of work.
Inclusion to enable neurodiverse people to contribute better, benefits all minorities as well as neurotypicals and brings better results.

I have seen an autist behave differently at work – didn’t go to lunch with others, didn’t look people in the eyes, needed exactly spelled out direction. And his career suffered.

Yet, whatever he delivered was flawless, detailed and well beyond expectations. With a bit more awareness, empathy and curiosity in the organizational mindset we can benefit much more from this kind of talent. On the bright side some years back, my manager said: „btw I am dyslexic, so don’t mind, if there are spelling errors. I appreciate, when you catch them“.

People should not have to mask at work. It takes valuable cognitive processing power away from work. And in a safer, more inclusive environment no one has to mask, which creates great teamwork.

Q3: Social – the S in the ESG – what would be some concrete steps for a company to “solve” this sustainability issue and to create real change?

A3: As for the S in ESG, it should always start internally. When an organisation doesn’t care about health & safety, D&I, fair pay or talent management, none of their external efforts will be credible.

Externally a company should tie their ESG efforts to their business purpose and strategy. Patagonia supports outdoors, Nike supports athletes, Sonova supports deaf artists …

My advice for any company starting on the journey: start focused, even small. Yet start with a journey in mind. And build your processes every year in depth and breadth organically.

Q4: Where do you, as a consultant, find most resistance from your clients?

A4: Most resistance comes from lack of knowledge and understanding that sustainable practices don’t cost more than what linear economy practices cost, as long as we aren’t comparing them to exploitative practices and as long as they find all those waste streams that they should turn into revenue streams in collaboration with other companies.

Similarly, they have this common misconception that sustainability is soooo complex and they need huge consultancy help for a lot of money. It is not true. Especially for SMEs, there are many, free or very inexpensive ways of gathering knowledge that can help them through the key stages of the change.

Essentially the biggest problem is that people compare sustainable practices and prices/cost to unsustainable practices (linear supply chains), where the real cost of ownership has never been published by the companies (real cost of ownership would include the impact of the product and the cost attached to regenerating that impact on both environment and society). So the comparison will always fail as we aren’t comparing apples to apples. We are oblivious to the real cost of food or other products we consume as society.

So that’s what companies now need to correct. Both by internalising the costs that were earlier externalised and sharing the true price of products/services, and by making the true comparison of sustainable & unsustainable supply chain practices accordingly. They will see that sustainable supply chains are much cheaper.

Q5: What frameworks do you recommend measuring social metrics?

A5: For the sake of transparency and comparability, I am a fan of internationally recognized frameworks. Yet the devil is in the detail. Fortunately, the organizations have many internal metrics already available. How many days were people trained, how many minorities do you have and how do they get promoted, any health or safety incidents are all already kept and can be reported on. And don’t forget the journey aspect: year by year improvement based on the original baseline is important. And don’t try to make the numbers look pretty. Your credibility is on the line.

Q6: CSR of the past has failed to keep it’s promise exactly in the “social” and “responsibility” parts. Where do you see most challenges for companies to apply the social responsibility? Do you have any specific recommendations?

A6: The temptation for companies in the past lied in the public acceptance of lack of transparency and lack of accountability. This is a thing of the past. In the short time we are talking about ESG reporting, there have been various reports on e.g. funds that were greenwashing, the latest example was across Germany and the result was pretty disappointing. Transparency is the way forward and many institutions are moving towards common and global standards.

However challenges remain in particular in the motivation why companies start on their ESG journey. To become truly sustainable (and not get tempted by cynical tick the box exercises) the leadership – board and C-Suite – needs to tie their ESG strategy to their business strategy. They will need to to do, because they truly want a sustainable, responsible business.

And once they see positive results from their activities, they will continue. I recall a discussion with a business leader from a reinsurance company. Initially he was quite cynical about the diversity efforts of his company. Today he is a great champion of women in business, because he saw first hand the great results some of the newly appointed women delivered.

My recommendation is, that leaders get actively involved to champion different metrics and get to experience the impact directly.

Q7: Moving towards the ESG as the CSR reloaded: what learnings can be applied in the new paradigm?

A7: I actually see ESG as the reporting of CSR – and with it it is a continuation of a journey of transformation. The biggest enemy of change is lack of credibility and I believe that is, where ESG comes in. Transparent and hopefully soon standardized reporting.

Social norms are changing as we speak. The need for change becomes more urgent and more accepted. Consumers are rewarding companies with purpose – not all across the board just yet, but companies cannot afford to be the last ones, because they may become irrelevant. And the first adopters already reap the benefits in customer loyalty, in better sales and better NPS.