Environment, Social Justice, Governance and Your Business: What You Need to Know

Tending to the environment, social justice and responsible governance are long-held values that grow out of our culture in Hawaiʻi. Mālama (stewardship), ho‘ohanohano (respectfulness) and kuleana (responsibility) have always guided our actions – personally and in business.

Yet the pressure on businesses of all sizes surrounding these issues is escalating. Employees and prospective hires want to know where a company’s leadership stands on many policy issues – some having little or nothing to do with the business itself. Customers want to know about a company’s values and the behavior of its leadership before they buy. Investors want reassurance that a business is doing more than turning a healthy profit; they also expect it to contribute positively to society.

HEI and other large local companies, such as Alexander & Baldwin, First Hawaiian Bank, Hawaiian Airlines and Matson, have begun publishing reports that disclose their policies, actions and performance on environmental, social and governance issues, or ESG. When we first began sharing this information in 2020, we were one of the first companies in Hawai‘i to do it. More and more, this relatively new concept has become expected as part of operating a business.

Even small and medium- size businesses need to think about these matters as they compete for talent, customers and investments.

Here are issues to consider:

• Environment: How is your business planning for and mitigating the harm from climate change, and supporting our state’s goals of a 100% renewable energy and carbon-neutral economy by 2045? Are you increasing your energy efficiency? Are you using – or even generating – energy from renewable sources like solar or wind? Are you encouraging employees to use public transportation or low-emission vehicles, and do you provide electric vehicle charging at your facilities? If you have fleet vehicles, how many are low or zero emission?
• Social Justice: How is your business working to overcome systemic bias in our society? Are you actively promoting diversity, equity and inclusion in your hiring and promotion practices? Does your employee base – and your leadership team – reflect the diversity of Hawai‘i? Do you offer products and services that address low to moderate income residents’ needs? Are you serving the interests of disadvantaged communities?
• Responsible Governance: How do your company’s decision-making structures and processes promote ethical, sound decision-making? Do you have robust systems for identifying, monitoring, managing and mitigating risks? Do your compensation programs incentivize the right goals and behaviors? Do you have a clear code of conduct and mechanisms for reporting and investigating potential violations? What are your policies regarding political activity?
• Accountability: How are you sharing the answers to these questions, and holding your business accountable for making progress? Do you discuss ESG-related challenges at employee meetings? Do you publish your values and ESG performance at your place of business, or on your website? Do you – like HEI and a growing number of other companies – publish an annual report on your ESG performance?

Being deliberate and open about your business’s ESG initiatives shows your contributions to a more resilient and sustainable Hawai‘i. Yet there are also practical reasons for focusing on ESG: Doing so can help in debt financing efforts and increase employee engagement, customer loyalty and investor confidence. Ultimately, paying attention to ESG is good for your business, and it’s good for Hawai‘i.

This monthʻs expert:

Connie Lau
President and CEO, Hawaiian Electric Industries