In my previous article, I explored the role of top management in fostering a culture of sustainability and business continuity. Now, let’s delve into the intersection of Environmental, Social, and Governance (ESG) and Business Continuity Management (BCM).
The world is evolving, and organizations need to stay abreast with modern trends. Through advocacy and constant awareness creation, overwhelming attention is placed on the business world on issues relating to the environment, social responsibility, good governance, and sustainability principles.
Business entities are considered stewards and ethical compasses for societal development. As human activities increasingly affect our environment, there is a growing need for guidelines and regulations to govern business operations to conserve nature.
The ESG concept gained official recognition in 2004, urging companies to integrate it into their operations by focusing on the components: Environmental, Social, and Governance (also known as Corporate Governance). ESG principles have evolved into a more comprehensive and universally adopted framework, shaping even how budgetary decisions within some of the world’s largest multinational organizations are made.
Due to the universal acceptance of the ESG initiative, a lot of debate has been generated on environmental issues encompassing climate change, energy use, waste management, pollution, natural resource conservation, wildlife, etc. Human beings are becoming more aware of their rights due to the continuous advocacy concerning human rights and freedom. In recent times, people are now concerned about their working conditions, and inequality both in employment contracts and society at large. Customers are interested in the safety of products and services and how it affects their health and the environment.
Corporate governance impacts organizational structures and the decision-making process. There is an increasing demand for the adherence to laws and regulations, shareholder rights, the composition of board of directors, and their tenure of office. Other vital considerations are corporate performance metrics, management structure, company policies and values, health and safety concerns, information disclosure and data protection, auditing, and corporate compliance among others.
Events such as natural disasters, cyber-attacks, and other unpredicted crises can adversely impact the smooth flow of business operations. Hence, businesses must implement measures to prevent or mitigate such events. This practice is known as Business Continuity Management (BCM).
BCM is a proactive strategy put together by a business to ensure that a company’s operations remain uninterrupted in the event of any disaster. In the event of an interruption, the company should be capable of performing essential activities until full recovery.
The BCM mechanism therefore seeks to safeguard critical business processes, minimize the level of disruption at any given time, and ensure that these disruptions does not adversely affect customer delivery. This mechanism usually includes strategies, procedures, crisis management plans, business continuity plans, disaster recovery, etc.
BCM plays a pivotal role in the ESG architecture. Generally, implementing BCM in an ESG framework puts the spotlight on:
Risk Assessment: Implementing BCM commences with undertaking a risk assessment to identify potential threats and vulnerabilities that could disrupt the operational flow of business. The effective implementation of an ESG initiative has the potential to minimize adverse effects on businesses. An ESG framework outlines responsibilities and metrics required to measure how companies safeguard the environment, address social and governance issues, and generally contribute to sustainable development.
Indeed, if ESG programs are taken seriously, it has the potential to reduce the work of BCM and how threats and susceptibilities can impact critical business functions. Issues of threats from natural disasters, cyber-attacks, and other ills of society can largely be attributed to human errors. Tackling them through ESG programs means ensuring a structured and a decent human society. These pillars in ESG have practical measuring tools and benchmarks to determine the impact of the activities and operations of businesses. For instance, because of human activities through the indiscriminate disposal of waste (human errors), there is the likelihood of experiencing flood (natural disasters) during the rainy season. In essence, if the ESG principles are well implemented and a checklist is designed to ensure compliance, there will be less challenges that will trigger the role out of BCM plans to address flooding and other occurences.
Business Impact Analysis (BIA): After identifying potential threats and vulnerabilities, a business impact analysis is required to ascertain the likelihood of the impact of these threats on the operations of the organization. There is a need to classify critical business processes and systems that could be affected by these threats and how they influence activities in businesses. In conducting BIA for the event of a flood for example, you need to state what will happen to your business if flood occurs. This could lead to the loss of lives, properties, revenue, and in the long run the inability to meet customer demands and expectations.
Recovery Plan: The risk assessment and BIA will point to some findings, and the results will assist the organization to design and develop a recovery framework. At this point, steps and measures are activated to minimize the impact of disruptive events on the organization’s operations. This includes developing procedures for business continuity, disaster recovery, crisis management, and working from alternative sites. The question you should ask yourself at this point is,”how do I still work to serve my customers when a disaster occurs”?
Still using the event of flooding as an example, an organization can activate the use of its alternative site(s) which is the standard practice for all business entities. An organization can decide to maximize the use of its online presence. This is to enable their clients to have easy access to their products and services until when they are fully restored. The organization can decide to send messages, emails, or post on their social media platforms telephone numbers their clients can reach them on. This means that, without the physical building, the business can still be in operation.
Training and Education: Training and awareness creation should not be a one-off activity. It should be regular and designed to address the knowledge gap as identified. Organizations that are deliberate about constant training of their stakeholders always benefit from it by minimizing their downtimes and the effect of disruption on their businesses. Training sessions and educational materials can be provided and made accessible to all stakeholders. Mostly, corporate institutions do well in training their staff, however, they overlook relevant parties such as customers, vendors/contractors, agents, and even Board of Directors. As part of the training program, practices like email notifications and displaying informative artworks within the office premises visible to staff, customers, visitors, and the general public, can help bridge the knowledge gap.
Organizations must nominate and train selected staff who will serve as ambassadors and implementation champions for various eventualities like fire, flood, cyber-attacks, etc. These champions are expected to train and educate their colleagues. Organizations can deploy the use of artworks that are focused on “Business Continuity Management” (BCM), Environmental, Social, and Governance (ESG) initiatives. Again, tit-bits can be created and deployed as screensavers for laptops/desktops. This ensures continuous access to this valuable information.
It must be institutionalized that, regular emails, SMS to relevant stakeholders informing them about initiatives aimed at safeguarding the lives, and properties of the organization, and its clientele is a standard practice. Interestingly, other stakeholders also have responsibilities and they must be outlined to them. All these measures will prevent potential disasters that could impact all parties, and provide guidance on mitigating the risk.
Testing and Review: Companies put together strategic documents to ensure business continuity but fail to test the potency of their plans. There is a need to test scenarios and conduct regular drills and simulations. I must applaud a lot of organizations for doing well when it comes to fire drills. As part of the process, fire alarms are deliberately triggered to measure response timelines and how to navigate through such a situation. These exercises do not only validate the plan and its effectiveness but also serve as opportunities to identify areas for improvement.
Continuous Improvement: Organizations should continuously improve their BCM and ESG programs by incorporating feedback from stakeholders, identifying new risks, and updating the recovery plan. There should be a dedicated team that will be well-positioned with adequate knowledge of best practices when it comes to BCM and ESG. They should be clothed with the mandate to safeguard the business operations through continuous improvement.
In today’s dynamic business landscape, sustainability has become the focal point for every business entity especially because of its international recognition and acceptance. Activities of orgnaization’s have generated massive environmental awareness especially climate concerns, resource management, etc and their impact on the environment. Some businesses have therefore integrated BCM and ESG frameworks in their corporate governance” without putting into place practical ways to operationalize them. It should not be lip service or simply an activity to meet certain local and international regulations.
Rather, it should be at the heart of every business in Ghana with deliberate steps to make the environment better than we met it and in the long term, build generational and sustainable businesses. Organization’s must therefore strengthen its robustness and resilience in preparedness for eventualities by optimizing both BCM and ESG initiatives. These actionable strategies will help in adapting to modern business trends and attract the right investmets.
Source: Bright Ampadu Okyere – (Business Continuity Coordinator), Bank of Africa, Ghana https://enterslice.com/learning/business-continuity-management-and-esg-a-key-to-resilience/
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