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Meeting the Moment: ESG Strategy and the Business of Resilience

Pharmaceutical ExecutivePharmaceutical Executive-08-01-2022
Volume 42
Issue 8

How principles of both can help companies navigate future storms.

A catastrophic train derailment on the return leg of an ordinary East Coast business trip in 2015 changed my life forever. During my long recovery, I had plenty of time to research and ponder the concept of resilience. Since I returned to work and took on leadership responsibility for environmental, social, and governance (ESG) issues at Organon, I have seen the substantive overlap of the strategies that makes us resilient as individuals—and as companies.

I have been told that one of the reasons why I survived injuries which were expected to be fatal was because I was in good shape both physically and emotionally. In the same way, highly resilient companies are those that have invested in their capacity to anticipate, embrace, and adapt to change to support long-term success. Occasional crisis simulations won’t build the “resilience muscles” companies need to meet the moment, in the same way that an occasional sprint won’t prepare you for a marathon.

The following are four ways that individuals and companies can strengthen their resilience muscles—so that their ability to withstand setbacks is not in doubt.

1. Live your purpose. As I considered going back to work, I knew I wanted to focus on purpose and having an impact. Articulating and living up to a clear corporate purpose is an essential element of organizational resilience. A well-defined purpose is a great unifier and motivator, and keeps everyone rowing in the same direction when the waves get rough.

A robust ESG strategy supports the resilience of the business and enhances its ability to achieve its purpose by meeting the shifting expectations of customers, investors, regulators, and employees. Thoughtful ESG goal-setting and reporting demands sophisticated analysis of long-term risks and opportunities, requires regular verification and reassessment, and builds the trust of constituencies that matter—all of which supports organizational resilience.

2. Take the temp on mood and motivation. Any doctor will tell you that mood and motivation are linked to wellness and recovery. Similarly, employee well-being is a critical element of any ESG strategy. The COVID-19 pandemic and “Great Resignation” have highlighted the importance of maintaining a healthy and motivated workforce. Investors are increasingly interested in additional disclosure of human capital metrics, such as data on employee turnover, engagement scores, and diversity metrics. These metrics are not only important indicators of organizational health at any moment in time but signal workforce resilience.

3. Supercharge your network. Researchers have shown the link between a strong social support network and faster recovery from trauma. In business, meaningful relationships with a range of external stakeholders—community leaders, thought leaders, and policymakers—also strengthen resilience by providing allies during disruptive events.

In the extractive industries, there are cautionary tales of business disruption that can occur when local communities are not consulted or engaged. There are analogies in the pharma world, which faces substantial political and regulatory risks that should not be ignored. Responsible pricing, commitments to access, diversity in our workforce, and diversity in clinical trials are just a few of the issues we know stakeholders are watching closely. A resilient company does not duck these challenges but engages with partners to address them.

4. Stay ahead of the pain. This is the medical advice I was given during my recovery. Staying ahead of the game is also important given the increasing regulation in the ESG space. The US Securities and Exchange Commission is expected to formalize rules this fall on ESG disclosure. The EU has recently passed a directive requiring even non-EU-based companies to file ESG reports. If companies wait for regulatory action to start preparing for a new world of mandatory and fully audited disclosures, potential complications and compliance costs will be higher.

There is a Tibetan saying that wisdom is like rainwater; both gather in the low places. I’ve also known pharma leaders who adore the adage that a crisis is a terrible thing to waste. Both quotes get at the same concept: Adversity presents a learning opportunity. While that learning is valuable, I know from personal experience it is far better to avoid those low places in the first place. Properly understood, an ESG strategy demands the kind of advance planning and resilience muscles that will help an organization avoid storms on the horizon, or at least safely ride them out.

Geralyn Ritter, Head of external affairs and ESG at Organon and author of Bone by Bone. In this role, she focuses on guiding and shaping how the company interacts with key stakeholders and the environment.

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