Governance: The Foundation of ESG – Why It Doesn’t Make Sense to Talk About the ‘E’ and ‘S’ Without First Addressing the ‘G’

In recent years, the ESG (Environmental, Social, and Governance) agenda has gained prominence in companies, investments, and public policies. Environmental sustainability (the “E”) and social responsibility (the “S”) have become buzzwords in reports, speeches, and campaigns. However, there is one element in this triad that is often underestimated — or even overlooked: Governance (the “G”).

And it is precisely where everything begins.

Why Does Governance Come First?

Talking about ESG without starting with governance is like trying to build a building from the roof down. Without ethical, transparent, and accountable structures, environmental and social commitments are nothing more than empty promises.

Governance is the set of practices, processes, and structures that guide how an organization is directed, monitored, and incentivized. This includes everything from the functioning of the board of directors to integrity policies, whistleblowing channels, anti-corruption measures, and the way decisions are made and audited.

If a company claims to care about the environment (E) but manipulates carbon emission data, the issue is governance. If an organization invests in diversity and inclusion (S) but tolerates moral or sexual harassment within leadership, the issue is governance. If an institution promises social responsibility but has a board made up exclusively of private or family interests, that reveals a governance deficiency.

ESG Without the “G” Is Just Marketing

The growing pressure for sustainability reporting and responsible investing cannot be met with good intentions alone. Every environmental or social plan must be supported by internal structures that ensure its implementation, oversight, and continuity.

Without governance:
• Environmental goals become merely decorative.
• Social initiatives turn into one-off philanthropy without a clear strategy.
• Ethical and reputational risks multiply.

This is why today’s more conscious investors examine the “G” under a magnifying glass. They know that sound governance practices are the guarantee that promises made will, in fact, be fulfilled.

Governance as the Foundation of Organizational Culture

More than just internal rules, governance shapes a company’s culture. It defines who is held accountable, how conflicts of interest are managed, whether there is transparency in processes, and what tone is set at the top.

It’s no coincidence that companies with high governance maturity:
• Make more strategic, less reactive decisions;
• Prevent fraud and crises before they reach the public eye;
• Create sustainable long-term value;
• Earn greater trust from the market and society.

How to Strengthen the “G” in Practice?

1. Ethical Leadership Development – Governance starts with leaders who are conscious, responsible, and open to listening.
   2. Diverse and Independent Boards – That represent more than just capital, but also stakeholders.
   3. Control and Transparency Mechanisms – Such as internal audits, ethics committees, and effective whistleblowing channels.
   4. Clear Policies and Responsibilities – Who does what, why, and based on which principles.
   5. Ongoing Risk Assessment – Including those related to the environment and society.

Conclusion: G for Guarantee

The “G” in ESG is the guarantee that the “E” and the “S” will not be mere rhetoric. It serves as the ethical filter that ensures environmental and social decisions are aligned with institutional values and the interests of all stakeholders — not just shareholders, but also society, employees, and the planet.

Therefore, before thinking of ESG as a tool for reputation or marketing, think of the “G” as the foundation, the cornerstone, the axis of credibility. Because without governance, any sustainability agenda becomes fragile and inconsistent.