Columbia University’s School of Professional Studies hosted a panel discussion discussing ESG (Environmental, Social, and Corporate Governance) and its implications for current global corporations.

On Thursday, February 15, the School of Professional Studies hosted a panel discussion called “ESG and Bioethics: Intersections, Opportunities, and Challenges” to explore modern corporations’ environmental and ethical obligations. ESG, or Environmental, Social and Corporate Governance, addresses contemporary issues of sustainability, worker’s rights, and medical ethics, among other interdisciplinary subjects. This event was moderated by Dr. Robert Klitzman, M.D., professor of psychiatry at the Columbia University Irving Medical Center.

Dr. Steven Cohen opened the discussion by explaining how the field of ESG has evolved in recent years to include DEI (Diversity, Equity, and Inclusion) in its mission. As the Director of Columbia’s Sustainability Management Program, he oversaw much progress in the DEI field, such as students and faculty pushing for educational considerations of equity. The definition of sustainability itself has come to include social impact, citing the social justice implications of Columbia’s attempts to build a gym in Morningside Park several years ago.

The second panelist, Paul Washington, leads The Conference Board, which is one of the leading independent think tanks in New York. Founded amidst growing workers’ movements, Washington’s organization aims to help corporations chart their own course of philanthropy, sustainability, and ethical obligation by publishing over fifty publications in a year and hosting confidential discussions.

Tracy Barba, the Executive Director of the Institute of Venture Ethics at Santa Clara University, focuses on working with venture capital funds. Her knowledge of business ethics and corporate governance is especially relevant within growing fields of corporate technology and data collection .

The last panelist, Michael Gerrard, is the director of the Sabin Center for Climate Change Law at the Columbia Law School and is primarily focused on the “E” of ESG. As legal requirements emerge in response to climate change, Gerrard follows legislative and regulatory changes from California and the U.S. Securities and Exchange Commission to track progress in environmental law.

As legislative changes continue to roll out, U.S. corporations may be impacted by new regulations. To address the implications of these legal changes, Gerrard and the other panelists expanded on the three scope model to track energy usage within corporations. In most of the United States, companies are obligated to report emissions to the government from two sources: Scope 1, which is directly from the company, and Scope 2, which is the electricity that they buy. However, the state of California, along with European countries, are focusing on mandating reporting of a third scope: emissions that occur within the supply chain.

This legal shift is particularly significant because Scope 3 emissions are notoriously difficult to get corporations to disclose, and the European Union’s mandate alone could affect around 3,000 US corporations, according to Washington. Europe is even considering taking this mandate further than full transparency from corporations, as many leaders have been discussing a concept known as double materiality. In simple terms, an ESG matter has double materiality if a company considers its environmental and financial impact.

Double materiality could mean requiring corporations to mitigate the environmental effects associated with their Scope 3 emissions. Although this initiative is not yet codified in law, the United States and other countries are looking to Europe and California to make their environmental policies even more impactful. These recent changes in climate law represent a profound shift in how companies must consider both their legal and ethical obligations. 

Expanding beyond environment and sustainability, Barba posited that the most significant challenge for corporations today is the growing prominence of data science. Companies must constantly balance innovating and data collection with growing consumer concerns about security. Additionally, the unpredictability of artificial intelligence requires corporations to acutely consider the ethical implications of using this technology.

As we consider the effects of company practices on consumers, we must also consider our community impact, said Dr. Cohen. Especially within the context of New York City, sustainable modernization must serve the residents of the urban environment. As we environmentally upgrade our buildings and infrastructure, it is imperative to consider how this may have a gentrifying effect. According to Cohen, the goal of urban environmentalism should be to allow equitable access to “green facilities.”

According to the panelists, a major source of urban modernization lies in investing in renewable energy. Although much of the technology needed to undergo a full transition to renewables exists, many corporations do not necessarily consider investing in renewables a high priority. In order to bring renewables to the forefront of the climate conversation, Cohen believes that more innovation, coupled with legislation, will allow alternatives to become less bulky and capital intensive. Prices for solar panels are already decreasing, and as time goes on, they could become even more cost effective.

However, he and Washington also cited an ideological shift as necessary to mitigate the climate crisis. For them, saving the environment must become integral parts of good business management, and well-run businesses should explicitly consider sustainability in their mission. Additionally, Washington spoke on the power of financial incentives in energy modernization as he foresees real economic opportunity in renewable energy.

Beyond environmentalism and technology, ethical considerations are especially important in biomedicine. Dr. Klitzman addressed growing concerns over overprescribing of antibiotics by doctors due to patient pressure. Antibiotics are meant to target bacterial infection, and when they are overused to target viruses instead, the body can become resistant to antibiotics. Many additional ethical challenges have emerged due to pharmaceutical advancement, and it is increasingly difficult to mitigate these problems because many healthcare providers have “poor experience in corporate governance,” said Klitzman.

Within corporations and the government, there has been much pushback on ESG initiatives. Washington believes this pushback is in line with a sort of “healthy skepticism,” as many progressive critics point out that “Wall Street’s current system for E.S.G. investing is designed almost entirely to maximize shareholder returns,” according to this New York Times article. However, Gerrard believes most of the criticism is detrimental to the movement. There are real social and environmental consequences to political opposition, as some companies are retreating from ESG funds and the SEC is backing off on the Scope 3 legislative requirement.As organizations seriously begin to consider ethical and social obligations in their business model, corporations will look to become more generally sustainable. For those interested in continuing the conversation on the intersection of science, ethics, and law, the School of Professional Studies is hosting an event with Dr. Liz Blacker called “Ethics for Lunch” on March 4.

Image via The Wingspan