Note: The opinions expressed in this article are solely my own and do not reflect those of my Firm or any organization I am affiliated with.
In Filipino slang, the letter “G” holds many meanings: from "Game!" (showing willingness), to "Ganda" (beautiful). This singular letter, similar to a lot of Filipino expressions, differs in meaning depending on the tone you use.
But the "G" I’ll be talking about here is not "ganda" or being “game”. Instead, I want to emphasize the power of another G – Governance - in ESG. Leveraging the power of governance pays off in the long run. It is crucial to prioritize Governance in ESG, as it holds immense power in a company’s quest to become sustainable and resilient.
Recently, P&A Grant Thornton hosted a forum on anti-fraud and anti-corruption, featuring esteemed speakers such as former Commission on Audit Commissioner Heidi Mendoza, Atty. Oliver O. Leonardo of the Markets and Securities Regulation Department, and Chris Ferareza, Partner at P&A Grant Thornton. One common theme highlighted by all three speakers was the importance of strengthening governance within an organization.
As someone who has been in the sustainability landscape for a long time, I’ve noticed that governance is often overlooked in sustainability discussions. This realization is reinforced by my experience conducting sustainability transformation projects and sustainability maturity assessments. We emphasize embedding sustainability within governance structures by ensuring that leadership includes individuals knowledgeable about ESG, implementing policies and procedures to support sustainability programs, and integrating sustainability into a company’s strategic direction, objectives, mission, and vision.
The Difference Between Sustainability and ESG
Sustainability and ESG are closely related but distinct concepts. Sustainability is a broad term that refers to long-term environmental, social, and economic balance, while ESG (Environmental, Social, and Governance) is a framework used by investors and companies to assess sustainability performance. In the following sections, I may use these terms interchangeably in the next sections of this article, as ESG is one of the main tools used to achieve sustainability goals.
The Overlooked ‘G’ in ESG
If I were to rank the three ESG pillars based on public perception of what sustainability professionals do, Governance would undoubtedly come last. Most people assume my work revolves around the environment, followed by social aspects, with very few - if any - considering that I focus on governance. This perception mirrors the broader public’s understanding of ESG, where environmental and social issues dominate discussions, while governance is often an afterthought.
Governance tends to be less tangible than environmental and social issues, making it harder to grasp and measure. Environmental topics often come with visible consequences, such as extreme weather events or deforestation. Social issues are also more emotionally charged, drawing attention to human rights, labor conditions, and community well-being.
Governance, on the other hand, deals with policies, structures, compliance, and accountability - elements that operate behind the scenes but are crucial in shaping sustainable practices.
Governance as the Foundation of Sustainability
One of the first concepts I learned as a CPA in consulting was the "Tone at the Top." This principle states that an organization's culture, ethical direction, and governance standards are set by its leadership and will trickle down to all levels of the organization.
When introducing and integrating sustainability into an organization, I firmly believe it will not be effective without strategic direction from the top. There must be representatives within the governance structure who truly advocate sustainability and drive the agenda forward. Without this, sustainability efforts remain superficial and lack long-term impact.
Strengthening Governance: Where Should Companies Focus?
If a company wants to improve its governance, it should focus on the following areas:
By fortifying these areas, companies can build governance structures that are resilient and resistant to fraud, ensuring long-term sustainability and ethical business practices.
The Power of Playing the ‘G Card’
Governance is not just a regulatory requirement—it is a strategic advantage. Companies that excel in governance tend to have stronger reputations, higher investor confidence, and more sustainable business models. The power of the G Card lies in its ability to create organizations that are not only profitable but also ethical, resilient, and future proof. So, the next time you think about ESG, remember that playing the G Card—strong governance—will always be a winning move.
So, I ask you: when it comes to making a difference, G ka ba?
As published in The Manila Times, dated 19 March 2025
