Leadership Environmental Social and Governance Essay 2022

Running head: LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Name of the Student
Name of the University
Author Note

1LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
The essay focuses on understanding leadership and its impact on the performances of
organization. It has been found in the present times that organizations that are leading on the
basis of their financial performances do not have CEOs that are ranked higher in the CEO
rankings that are provided by organizations such as the Harvard Business Review (HBR 2017).
The study is focused towards the effective analysis of leadership in view of the environmental,
social and governance (ESG) metrics. These factors determine leadership most effectively in the
present times. This is evident from the fact that Amazon CEO, Jeff Bezos was not among the
higher ranked CEOs as per the rankings (Harvard Business Review - Ideas and Advice for
Leaders, 2019). Thus, it is important that the financial metrics are given as much importance as
the ESG metrics in determining the organizational leadership effectiveness. Three important
CEOs have been chosen on the basis of their positive and negative contributions towards
leadership development. The examples of 3 CEOs of large world organizations have been taken
into consideration to develop better understanding of the requisite competencies of CEOs in the
present corporate scenarios. The CEOs selected are Samsung electronics CEO, Kim Ki-Nam;
CEO and chairman of Adobe Inc. Shantanu Narayen and the CEO of Amazon, Jeff Bezos. The
aim is to analyze their contribution towards the development of better performing organizations
and workforces. One of the reason, the CEOs of some of the largest organizations in the world
were unable to make the top list of the CEO rankings was their lack of performance in the field
of environmental, social and governance. However, ESG is driven more by the financial rather
than ethical motives.
There are significant debates concerning the evaluation of the success of leaders in view
of the present corporate environments. Presently, global business organizations have to face
significant pressure from their operational and functional environments. It is important to

2LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
understand that the businesses today face more turbulence than they have faced anytime in the
past. As a result CEOs need to maintain more functions than they have maintained in the past.
This brings forwards the need for the proper implementation of the ESG metrics
(www.msci.com, 2019). These metrics are valued on the basis of the environmental, social and
governance oriented aspects that guide them. The metrics however are driven more by financial
motives than ethics. The CEOs in today’s world should be evaluated more on the basis of how
they influence the people and the environment around them and help them to positively perform
in accordance of the rapidly changing business scenarios. The ESG metrics very effectively puts
forward these factors in determining the effectiveness of the new age leaders and CEOs (Eccles
& Stroehle, 2018). The need to address the current business problems are important. The CEOs
are the best people that can led organizations towards success. In determining their effectiveness,
the ESG metrics need to be properly evaluated. The ESG metrics tool is designed to provide
investors with a large amount of data that can be compared across more than 8500 companies of
the Investable Market Index (www.msci.com, 2019). This is exactly the area where the metrics
are used to determine financial values. The ESG practices of organization and the ESG practice
competencies of their leaders can hence be measured. A data set is created of major components
that can determine the effectiveness of the organization and the CEO. Concerning the same some
of the important aspects are risk exposure, practices, performance and controversies. Some of the
important factors that are considered in regards to the same are climate change, pollution, natural
capital, environmental opportunities, human capital, product liability, corporate behavior and
stakeholder opposition.
An example can be given in this case of the Samsung CEO, Ki-Nam Kim. He is the CEO
of the electronics department of Samsung. He has been responsible in bringing about changes in

3LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Samsung that have positively affected the environmental, social and governance factors that are
connected with the operations of Samsung. This has in turn helped Samsung electronics to keep
on with their positive position as the top financial performer for the organization. At the same
time the revenue of the organization from the sale of the flagship smart phones have increased.
The South Korean is ranked 13 on the rankings of the best CEOs in the world. Some of the most
important decisions that provided him with better ESG performances were the quick recall of the
problematic Samsung smartphones, making sure that the product lived up to the quality
guidelines and improving the functional effectiveness of the products manufactured by Samsung.
The leadership of Ki-Nam Kim has actually helped Samsung to be environmentally effective,
socially responsible and effective in terms of the governance. The organization has been able to
perform better is these areas due to the effective decision making by Ki-Nam Kim ("CEO |
Executives | Company | Samsung US", 2019). In the present corporate world it has become much
important that the leadership focuses not only towards all-round growth that can not only be
beneficial toward improving the financial performances but also sustaining the performances in
the long-run. All the positive changes that were implemented by the CEO helped Samsung to
gain a revenue of 20.99 Billion US dollars considering its mobile communications segment
(Elsbach & Stigliani, 2018). It is important to consider that the organization has been performing
good as it has been able to be more responsible in handling the major concerns that are
connected with its operational areas. Samsung is now more focused towards eco-management
due to the work of the CEO. Kim has also made sure that the governance of Samsung has been
optimized as per the operational requirements. More emphasis has been provided to employee
welfare and the creation of better workplace environments. These factors are presently much
important as the businesses are focused long term development and effective risk management.

4LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
The traditional views of measuring the effectiveness of CEOs till now have been based
on the financial performances of the various organizations. The CEOs have been previously
judged to be effective if the financial returns garnered by the organizations were good and
increasing. However, there were some major flaws within the process as there are also many
different areas in which an organization operates. Moreover, if only the financial metrics are
followed in the dynamic business environments of today it can mean overlooking the long term
development and financial sustainability of the company. There are various challenges that are
being presently faced by the large corporate houses and the people that lead them presently. One
of the major challenges that is present in the current corporate environment is attracting the
investors. The organizations of today engage in large scale projects that require large finances.
For this significant funding is required from the investors. The ESG metrics are becoming
important parameters for the investors to judge the capabilities of the organizations. The
investors want to get more trust on the performance aspects of large organizations. This
necessitates that the ESG criteria is met by the concerned organizations. In regards to the same
the environmental criteria considers the performance of the company’s stewardship towards
nature. The social criteria measures the relationship management that takes place within the
organization. This is concerning the employees, the suppliers, customers or communities. The
governance aspects are concerned with the effectiveness of the leadership of the organization.
All the three areas connected with the environmental, social and governance aspects are
challenging considering the current situations within which organizations tend to operate.
In view of the challenges that are faced by organizations in the present corporate
environments, an example can be provided of CEO and chairman of Adobe Inc. Shantanu
Narayen. Adobe Inc. was a software company that was in urgent need for transformation due to

5LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
challenging competitive situation that it endured in the world software industry. Shantanu
Narayen focused more towards employee relationship development and more customer
engagement. This was based in the development of the organization as per the ESG framework
(Leaders, 2019). This was an effective and important guideline to be followed. He took up the
flagship projects like Photoshop, Acrobat/PDF and Premiere pro. He transformed these services
into cloud based services. The expansions strategy of the organization worked and it was able to
gain 100 billion US Dollars as a result. In the present times it is becoming increasingly difficult
for organizations to function solely on the aim of financial aims. This is mainly because financial
aims seem to be short term and many times insufficient to cover all the strategic developmental
aspects that the companies want to achieve. To base effective leadership standards on the
achievement of financial goals are not sufficient for achieving optimal levels of growth at the
present times. This is because the organizations across the world are vying for the optimal
utilization of their resources and creating better and long standing relationships with their
stakeholders. These stakeholders are diverse range of publics. For example- some of the most
important stakeholder groups presently are considered to be the communities, the employees and
the government. Without implementing proper ESG frameworks these groups cannot be
addressed. Hence, the financial motives does not seem to always help the organizations to
achieve the support of the stakeholders that is much necessary for growth. This leads to further
challenges being faced as the competing organizations can take advantage of the situations. This
brings forward the need to develop strategies that are focused towards improving the financial
factors by taking care of the aspects that can ensure increase of the revenue earning capabilities
of the organization in the future. The factors are important in developing capabilities that can
determine long standing performances as has been seen in the case of Adobe and CEO Narayen.

6LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
The development of better ESG strategies has helped him to be one of the higher ranking leaders
on the list.
Financial growth and ESG performance metrics are both intrinsic elements that can
determine the growth value of the organizations involved in the modern business environments.
There are major challenges that are faced by the leaders in the development of proper balance
between ESG and the financial metrics. The ESG criteria are important in the measurement of
financial support that would be provided by the investors in the various projects that undertaken
by any given organization. The balancing of the two functional aspects become very important in
determining the success of organizations in the present world (Western, 2019).
However, there are some important challenges concerning the balancing of the financial
and the ESG performance metrics. It is important to consider each and every stakeholder while
creating effective strategies for financial growth. One important challenge is that the ESG goals
and the financial goals may be motivated by different success factors. For example- the
organization could want to improve production by double the current standards. However, the
ESG goals could be to improve stakeholder relations. This means that the company can either
pay attention to any one of these aspects. Otherwise both the goals might not be optimally
achieved. Constant pressure on the employees to perform in accordance of the requirements for
gaining excess profits can result in the damage to the employee’s needs due to demotivation. The
hierarchy of needs provided by Maslow may in this case be violated (Lee & Hanna, 2015). This
in turn would result in the high turnover rates. As a result the goals of the immediate profits
would be met. However, the skill base required to keep on achieving the productivity goals
might be lost. In this way it would become impossible to sustain long standing profitable
productivity.

7LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
A good example can be given in this case of Jeff Bezos, the CEO of Amazon. In the last
five years some important issues have been faced by the organization’s internal stakeholders.
These include unreasonable expectations, breeding of unhealthy employee competition,
favoritism in the management process, lack of effective recognition and disregard for work life
balance (Jordan Valinsky, 2019). This is an important area that is actually affecting Amazon
through the loss of skilled labor. The leadership of Jeff Bezos has been defined as overtly
forthright rather than transformational. This has been a significant problem with the corporate
culture of the company. There have been alleged pay issues within the company that have
contributed towards employee turnover rates going high. The important thing to remember is, all
these things happened while the financial goals were being achieved by the organization. At
times a Machiavellian style of leadership is implemented by the company. The leadership
becomes willing to use any means necessary to gain excess productivity. This has been one of
the reported issues within Amazon that has contributed to the fact that Bezos has been ranked
very low in the CEO rankings. There has been more utilization of high power in the
organizational structure of Amazon. This has been a challenge as the employees have felt
intimidated by the same. Herzberg’s two factor theory has greatly determined the employee pays
in the last five years in the larger companies as compared with the employee motivations
(Alshmemri, Shahwan-Akl & Maude, 2017). Jeff Bezos has a major problem with regards to the
ESG standards of Amazon if the current problems are not addressed. Amazon had openly spoken
against taxes that were to be implemented on large organizations to help homeless people. This
was a very dramatic measure against the community.
Some important recommendations that can be made in this case to give more importance
to the Maslow’s hierarchy of needs. In accordance of the same the various needs starting from

8LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
physiological to self-efficacy need to be addressed. The employees should be given more
independence and scope to gain positive growth value within the organization. One important
step that can be taken is to generate better dialogues. Better and more effective dialogues would
help to bring the people of the organization closer to each other. In this way the organizational
culture can be greatly improved by Amazon.
In conclusion, it can be said that the modern theories of leadership are based on how
people can be better managed through the development of better relationships. This means that
the people that are working for the various organizations need to be optimally motivated by the
leaders. The two CEOs Ki-Nam Kim and Shantunu Narayen were found to be at par with the
present values of leadership development. However, it was found that Jeff Bezos has had issues
with leading Amazon in the last few years due to the lack of effective handling of the employees
and the other major stakeholders. It is important to note in this case that leadership in today’s
corporate environments need to be effectively managed considering many different stakeholders
that form important parts of it. It is also important that the factors of ESG metrics are given
more value by all the large corporations that have global operations. The environmental, social
and governance factors have the power to determine the effectiveness of organizational
functions.

9LEADERSHIP: ENVIRONMENTAL, SOCIAL AND GOVERNANCE
References
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