While the “E” and the “S” in ESG are rather straightforward, one would ask, how does the “G” in ESG contribute to the sustainability goals of an organization? What does it involve and what is its essence? Sustainability is generally defined as the approach taken to running business operations that utilizes available resources in a way that is cognizant of the needs of the forthcoming generations. In other terms it can be defined as practices that a business undertakes to ensure that the business is operational in the foreseeable and even distant future, ie that the business can keep itself running. 

While ESG Reporting is not a new concept in the corporate space, it is a dynamic concept that organizations are striving to obtain a new understanding of. Environmental sustainability is the most urgent, as it involves efforts and initiatives to reduce carbon emissions and prevent the degeneration of the conditions in our common home. Social sustainability speaks to the commitment that organizations make to protect the interests and wellbeing of the people in the societies in which they operate. Social sustainability pays attention to managing the impacts that businesses have on people. 

Governance relates to how corporate actions are guided, limited and directed. Sustainable governance, is, therefore, the application of systems, structures, policies and practices by top level leadership that guide the organization’s activities and hence maintain it as a going concern. 

Components/Elements of Sustainable Governance

The following are attributes of sustainable governance structures and are recommended as best practice in achieving Sustainable Corporate Governance

1. Compliance with relevant laws and regulations
   The legality of an organization’s practices is the bedrock of good governance. The organization’s governing body is tasked with providing oversight on whether the corporation is compliant with existing laws to mitigate compliance and business risks
   
2. Financial Reporting & Sustainability
   The financial health of an organization is critical to its operations and continuity. Sustainable governance dictates that the utility of financial resources is optimized, audited and transparently disclosed to key stakeholders. This involves ensuring that efficient processes which conserve resources are adopted and that only financially viable opportunities are prioritized and pursued.

3. Strategy Governance
   This involves defining the organization’s purpose for existing and its prospects into the future, ie the organization’s vision and mission. It also involves laying out a long term plan for the achievement of the long term goals of the organization while breaking them down into objectives and into shorter term key performance indicators to measure the progress towards achievement of the goals. Sustainable governance ensures that strategic objectives are interwoven into business decisions.

4. Board Independence & Governance 
   The decision making powers of an organization are vested in the Board of Directors by the shareholders. As a functioning organ, therefore, the board ought to be free from internal and external influence of every sort. Additionally, it must be properly constituted with competent and qualified board members. 

5. Policies, Systems, Practices & Procedures
   The Board’s guiding principles are contained in their policy documents which establish systems, practices, procedures and bestow functions  on various officers of the company. The quality of the board policies and structures are vital in guiding the activities of the organization and in creating organizational culture. 

6. Consistent shareholder and stakeholder value enhancement
   In the age of shareholder activism, boards of directors are increasingly alive to the needs and demands of shareholders and stakeholders to deliver value. Noting that there is a new wave of shareholder and investor scrutiny, Boards do not only need to ensure utmost transparency in their integrated and sustainability (ESG) reporting but also devise a variety of ways and means to engage their stakeholders to accurately capture their concerns and interests to deliver maximum value to them.

Sustainability Governance

Sustainability governance is a concept related to Governance sustainability and it refers to the conscious efforts made by the board or top level management to drive policies and agendas that accelerate the achievement of environmental and social sustainability.  Based on this premise, therefore, sustainability governance provides the impetus for which an organization effectively ensures the implementation of environmental and social governance practices. It helps a company implement sustainability strategies across the business, manage goal-setting and reporting processes, strengthen relations with external stakeholders, and ensure overall accountability.

In conclusion, Sustainable Governance is the practice of leadership at the board level and top level management that maintains a company as a going concern. Strong policies, systems, practices and structures contribute to the optimal functioning of the board hence supporting its sustainability. Done right, the corporation is able to create an effective governance structure and culture that is carried forward into the future of the organization as a sound leadership mechanism.