Is there a connection between Ethics and ESG?

Is there a connection between Ethics and ESG?

The question of the connection between ESG and Ethics has troubled me and there has been a lot of debate about Ethics and ESG. To come to a conclusion - I decided to ask Chat GPT 2 questions:

• Is there a connection between Ethics and ESG?

• What is the origin of ESG?

From this base, I went into a relook at the original source of ESG – and that is the bible. In this week’s Torah (bible reading) of Mishpatim (translated as “Laws’), we have the concept of “double materiality” There is increasing use of the words “double materiality” in ESG/ Sustainability story of Companies.

Double materiality assesses the risks a company's activities pose to the environment and society.

It is remarkable that the Torah Laws given us to 3,400 years ago was so sensitive these issues. It was most definitely a revolution in so many ways, and these principles are so relevant still today. With all the so-called Innovation and advancement, we are at the core self-centered and governed by “whats in it for me?” and as a consequence we have oppression and abuse, unfair labour conditions, slavery and forced poverty around the world. Hence , the need for ESG today.

Indeed, quoting Dr Meir Tamari

“The urge for material goods is probably the most powerful desire that a man has; it’s the only one perhaps that is never satisfied, never gets weaker and always difficult to control.”

Is there a connection between Ethics and ESG? “

Yes, there is a connection between ethics and ESG (Environmental, Social, and Governance) investing. ESG investing is an approach to investing that takes into account a company's environmental, social, and governance factors, in addition to traditional financial metrics. This approach is based on the belief that a company's long-term financial performance is closely tied to its environmental and social impact, as well as the quality of its governance. Ethics, on the other hand, is concerned with determining what is morally right and wrong. It encompasses principles and values that guide behavior and decision-making. In the context of business, ethics plays a critical role in determining the right course of action, particularly when it comes to issues such as social responsibility and environmental sustainability.

ESG investing is, therefore, closely tied to ethical considerations. By taking into account a company's environmental and social impact, ESG investors are effectively making ethical judgments about the companies in which they invest. For example, an ESG investor may avoid investing in companies that engage in activities that harm the environment or that have poor labor practices. Similarly, an ESG investor may look for companies that prioritize ethical behavior and have strong governance practices.

Overall, the connection between ethics and ESG investing is clear: both are concerned with doing what is right and just, whether in terms of social responsibility or financial performance.”

Chat GPT

What is the origin of ESG?

“The concept of ESG (Environmental, Social, and Governance) has its roots in socially responsible investing (SRI), which emerged in the 1960s and 1970s. SRI is an investment approach that considers not only financial return but also the social and environmental impact of the investments. Over time, the idea of SRI evolved to include the concept of ESG. ESG investing, which gained prominence in the 2000s, is an investment approach that takes into account a company's environmental, social, and governance factors, in addition to traditional financial metrics. The term "ESG" itself was coined by the United Nations Global Compact in 2004, and the organization has since been instrumental in promoting the concept of ESG investing. The UN Global Compact is a voluntary initiative launched by the United Nations in 2000 to encourage businesses and organizations to adopt sustainable and socially responsible policies and practices.”

Today, ESG investing has become a mainstream investment approach, with many investors considering ESG factors as part of their investment decision-making process. The concept of ESG has also expanded to include a wide range of issues, such as climate change, diversity and inclusion, labor standards, executive compensation, and board composition.”

Chat GPT

With this base, I want to explore the origin of ESG , some 3,400 years ago. And that is the Bible. And for a deeper understanding I am asking the question:

What is the difference between Laws and Ethics?

In the opening words of this week’s Bible reading are the words “These are the judgements that you shall place before them”. The great Bible Commentator Rashi shares the following insights – He says the placement are these Laws are just after the preceding passage that deals with the Alter – in other words the Temple service and the worship of God. I.e., There is a direct correlation between Justice and the recognizing that there is higher power that we are accountable to.

Another insight that we glean is that the Laws are placed before them. I.e., we are empowered to learn and practice these Laws. This week’s reading deals with many laws of social interaction. When one looks at the Laws, there is most definitely an element of Truth, fairness, justice and damages. In essence, on the one hand we are obliged to follow the Laws. On the other hand, we have Ethics, be it Moral Ethics or Businesses Ethics. What is the difference?

So, I decided to do some googling. Ethics provides us with guides on what is the right thing to do in all aspects of life, while the law generally provides more specific rules so that societies and their institutions can be maintained. Ethics engages our thinking and also our feelings, including those of disgust and guilt. Business law determines the minimum standards of behavior expected of companies and sole proprietorships. Business ethics go beyond simple legality. They describe the way a business should behave – how a business does what it is legally obligated to do.

So, Ethics is higher calling, and want to highlight Jewish Business Ethics which the Late Rabbi, Dr Meir Tamari who was promoter in articulating the principles of Jewish Business Ethics. Rabbi, Dr Tamari was born Leopold Fagov in Cape Town, South Africa, in 1927, and graduated from the University of Cape Town with a degree in economics in 1948. Tamari was an active member of the Zionist Bnei Akiva youth group, and in 1950, he joined other members of this group in moving to Israel. In 1960, He became an economist at the Bank of Israel, attaining the status of Chief Economist of the Bank of Israel. Subsequently, He served as senior lecturer in economics at Bar Ilan University. Bar Ilan defines itself as a religious Jewish university, but Tamari was disturbed by the seeming disconnect between the Jewish and academic identities of the school and its students. He wrote: "Although the university is an Orthodox Jewish institution, I found myself teaching course in corporate finance in exactly the same way I would have done in any other university in the world, with the content completely divorced from a Jewish value system." He began to introduce more Jewish sources and content into his economics courses, in order to emphasize that Jewish tradition adopts a particular ethical approach to economic issues and problems. Ultimately, He "created a special course that would attempt to present to the students this value system and its practical application to economics".

This was the first, or among the first, accredited business ethics course offered in an Israeli institution of higher learning. These courses helped Tamari to lay the foundations of his unique approach to Jewish business ethics. He also began an intensive lecture schedule to lay audiences worldwide on the topic of Jewish Business Ethics. In 1987, Tamari published With All Your Possessions: Jewish Ethics and Economic Life. The book, based on the Bar Ilan University course, is still in print after 20 years. This was followed by The Challenge of Wealth: A Jewish Perspective on Earning and Spending Money (1995), Al Chet: Sins in the Marketplace (1996), and Jewish Values in our Open Society: A Weekly Torah Commentary (2000) And series on the Haftorah, In 1992, Tamari founded the Center for Business Ethics and Social Responsibility, on the campus of the Jerusalem College of Technology. He continues to serve as the honorary head of the center. Today, the center is known as the Business Ethics Center of Jerusalem.

Source: https://en.wikipedia.org/wiki/Meir_Tamari

In my copy of his book, I have original handwritten signed Quote from Rabbi Dr Tamari which reads as follows:

“The urge for material goods is probably the most powerful desire that a man has; it’s the only one perhaps that is never satisfied, never gets weaker and always difficult to control.”

So, with this brief intruction to Jewish business ethics and Rabbi, Dr Mair Tamari, let us focus on the first topic of this week’s reading- While the Bible allows slavery, there are many laws to protect the slaves and treat them well, who have the right to freedom. their debts cancelled, every seven years. This practice protects Jewish slaves from being held as indentured servants for extended periods of time, and emphasizes the dignity of all, no matter social status. Judaism relationship with slavery is complicated. The practice of Slavery is strongly discouraged, and the Torah stipulates that all Jewish slaves must be set free, In the Haftarah for Parshat Mishpatim, Jeremiah berates the people of Judah for keeping Jewish slaves against God’s wishes and predicts that Jerusalem will be conquered because of the people’s disrespect for God. There are many discussions why the Bible allowed this. Generally, People became slaves when they could not pay their debts, and slavery was a societal safety net. The problem arises when people and salves are exploited. And here we can look at our original question is what is the difference between laws and ethics?

Ethics imply doing the correct action and going beyond the law to set a higher standard. So, are the laws of the Torah ethical? What we learn from these laws that we can apply to employment laws. Indeed, there are today many social impact examples of modern employment practice - contribution to health and pension funds, severance pay. I am trying to tie in themes of where the roots of ESG - Environment, Social and Governance can be found in the Bible.

For more writings on ESG / Israeli Impact see m - https://upgradingesg.com

So, when looking at the book "With all your possessions - Jewish ethics and Economic life" by Rabbi Dr Meir Tamari z’l , He writes that many of the social employment laws can be sourced in the Torah - For example in Chapter 6 and specially on pages 145 , 146 “In Jewish law, if an employee is not able to perform a job contracted for, he can be fired irrespective of the reason. If he is fired, he must be treated in an honorable fashion as derived from this week’s reading when a slave is freed.

He further asks - How do we reconcile this with the following: And though shall do what is righteous and good. Deut 5.18 The implied understanding that is an ethical issue i.e. This is an act of kindness rather than a legal obligation. He further highlights that element of kindness is distinct from contractual obligation.”

And this is where the principles of Ethics and ESG comes into play.

Indeed, the question who is obligated to provide for social costs of Medical and Retirement is a big debate and a key differentiator between Capitalism and Socialism. While we all responsible for supporting ourselves, many of these social needs of funded/paid through Employment, and the State hopefully providing an umbrella by State Pensions and Medical Services. From a Jewish perspective there is element that is customary that the Community has a moral obligation, and that is why had Organisations like the Chevra Kadisha – which is loosely translated as Holy Friends who raise money to support those less fortunate members of the community and the strong tradition of giving and charity in our DNA.

There is much more to learn, share and practice here, and I hope this little introduction can spark a higher awareness of Jewish Business Ethics in our daily life.