When it comes to pioneering green climate initiatives, many Caribbean companies have already baked Environmental, Social, and Corporate Governance (ESG) approaches into the ethos and culture of their organisations. ESG has emerged as a critical framework for evaluating a company’s sustainability and societal impact, it represents a company’s commitment to responsible business practices.
ESG is not the latest framework for solving the climate crisis, it has, however, gained significant traction globally, especially within the Caribbean region recently as companies look to encourage sustainable development. This theme was discussed extensively during The Island Finance Forum 2023, a free virtual event that brought together senior financiers, development partners, and regulators to address the unique financial challenges faced by global island communities, aiming to highlight solutions for sustainable economic recovery and inclusive growth in a post-pandemic world through interactive sessions, networking opportunities, and showcasing the economic opportunities of investing and ESG in the sustainability sector.
Watch the session led by PwC in the Caribbean during the Island Finance Forum 2023:
ESG represents a set of criteria that evaluate a company’s performance in terms of its environmental impact. For example, Sandals Resorts, a leading ESG facilitator has ensured that “resort branches are in the Earth check program, and so [the company] has policies to govern all elements of sustainability and green and clean technology.” as raised by Jessica Shannon, the Chief Experience Officer at Sandals Resorts International, during the Island Finance Forum (IFF) 2023’s all-female lead panel session.
To reiterate the contributions of Tisha Marajh, Senior Manager and Group Sustainability Officer at Republic Bank from the same IFF Session, ESG also illustrates social responsibility, aptly demonstrated by Republic Bank employing “strategies to monetize investments into achieving these sustainable development goals.. [by implementing] diversity, equity, inclusion policies and practices across [their] territories and branches.” For the success of these plans, governance practices must be at the forefront driving these strategic changes. As ESG considerations have become increasingly important for private sector companies across the globe, it is imperative that companies operating in the Caribbean and other Small Island Developing States (SIDS) keeps abreast with ESG reporting.
The Caribbean’s Perspective on ESG
In the Caribbean, where the natural environment and social well-being play a central role in the region’s identity and economy, ESG is of paramount importance. The unique environmental challenges faced by the Caribbean region underscore the urgency of addressing ESG concerns.
The Caribbean region is home to a diverse range of ecosystems, including coral reefs, mangroves, and rainforests. One of its most pressing issues is climate change, which leads to rising sea levels, increased frequency and intensity of hurricanes, and coral bleaching events. These factors have a detrimental impact on the region’s fragile ecosystems, resulting in biodiversity loss posing risks to agriculture and tourism, a key industry in the Caribbean.
Recognizing the urgency of addressing ESG concerns, Caribbean leaders have taken notable steps to drive positive change. Governments, non-governmental organisations, and regional initiatives are actively working to promote sustainable development and resilience. Efforts include implementing renewable energy projects such as the St. Lucia Electricity Services Limited’s Solar Farm, investing in climate adaptation measures, and strengthening environmental regulations, seen through the push in action plans like the Bridgetown Initiative. Caribbean leaders are also engaging in international forums to advocate for climate action and sustainable development funding.
A shift towards Integrated Thinking and Reporting
The Financial Sector of the Caribbean has been driving the much-needed transformation within the region, as they begin to recognize the need for integrated thinking that goes beyond traditional financial reporting and consider the broader impacts of business activities on people and their environment. They have asserted their stance by calling for a more holistic approach to governance and reporting, and by the understanding that sustainable development and long-term success require a balanced consideration of social, environmental, and economic factors.
This can include reporting on key environmental metrics, such as energy consumption, waste management, and greenhouse gas emissions, as well as social initiatives related to community engagement, employee well-being, and diversity and inclusion. Including these aspects in reporting provides a more complete picture of an organisation’s overall performance and sustainability commitments.
More and more Caribbean businesses are embracing these ideas by adopting this approach. During the 2023 IFF panel session, Jessica Shannon disclosed that “Organisations are cognizant of the vulnerability faced by island states within the Caribbean, however they want to position themselves as well as the broader community and the broader ecosystem around the region as the centre of excellence for green climate initiatives.”
By incorporating sustainability reporting, companies within the Caribbean will possess the ability to position themselves as leaders in the region and attract responsible investors and business partners who prioritise ESG considerations.
Government’s Role in Driving Results
Governance is vital to ESG operations. Effective governance frameworks provide guidance and incentives for businesses to adopt ESG practices. By highlighting the role of governance in promoting this strategic reinvention, Caribbean governments are signalling their commitment to fostering a business ecosystem that supports long-term growth and sustainable development. It was put forward by Cheryl Senhouse, the Finance Innovation Director at the Caribbean Climate-Smart Accelerator that “Our ability to achieve the positive outcomes from social as well as environmental material issues without the governance structure will not be there. I think governance is the starting point, we need them to be able to integrate that [ESG focused] thinking and drive from the level of our boards as well as our management teams … within our business community.”
While government does serve an important role in the grand scheme of things, Gillian Charles-Gollop, Executive Director of Corporate Banking and Sustainable Finance at the CIBC First Caribbean noted that “We always think the government should lead the initiatives but the partnership between the private sector and the public sector is important particularly as we look at investing in sustainable development.” Elaborating further on her point, the governments in the region can indeed play a pivotal role in driving this transformation, however, they must work in tandem with the private and public sectors to ensure a comprehensive approach.
Through this proactive governance, Caribbean governments then have the capacity to create an enabling environment that supports businesses in their ESG journey. By collaborating with stakeholders within the public and private sector to encourage innovation, investment, and responsible practices within these industries, governments will drive the shift towards proper ESG reporting and foster a sustainable and resilient economy in the region.
Conclusion
The Caribbean region’s commitment to Environmental, Social, and Corporate Governance (ESG) is vital for addressing the unique environmental challenges it faces and ensuring sustainable development. ESG considerations have gained significant traction in the Caribbean, with companies and governments recognizing the need for responsible business practices and reporting. Through initiatives like renewable energy projects, climate adaptation measures, and strengthened environmental regulations, Caribbean leaders are actively working towards a more sustainable future.
In conclusion, the future of ESG in the Caribbean lies in the collective efforts of businesses, governments, and stakeholders. By embracing sustainable practices, adopting integrated reporting, and prioritising responsible governance, the region can lead the way in green climate initiatives and position itself as a centre of excellence for sustainable development. The Caribbean’s commitment to ESG will not only protect its fragile ecosystems and promote social well-being, but also attract investment and drive long-term economic success in the post-pandemic world.
