How Environmental, Social and Governance Frameworks Are Contributing to Inclusive Business Practices in the Caribbean

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ESG frameworks and inclusive business practices in the Caribbean

How Environmental, Social, and Governance Frameworks Are Contributing to Inclusive Business Practices in the Caribbean

Introduction

Environmental, Social, and Governance (ESG) frameworks are reshaping corporate accountability worldwide, pushing businesses to adopt sustainable and inclusive practices.

Environmental, Social, and Governance can trace its roots in international discourse from the Bruntland Commission in 1987, which popularised the idea of sustainability as a development concept. The term was officially cemented in 2004 in the UN Global Compact “Who Cares Wins” report, where the term was coined.

Source: Climate Partner

The UN Global Compact is the world’s largest corporate sustainability initiative, which endeavours to have “…companies align strategies and operations with universal principles on human rights, labour, environment and anti-corruption…”.  This is to be accomplished by embedding Sustainable Development Goals-aligned practices into business operations and accelerating progress for the 2030 Agenda.

What is ESG?

Investors are increasingly integrating ESG criteria into their decision-making processes, evaluating businesses based on their ESG performance. Companies incorporate these principles through three key dimensions:

  • Environmental: Examines the performance of an organisation in terms of stewardship towards the protection of the natural environment. The factors could include emission reduction, climate change, waste management, biodiversity impact, water stewardship, circular economy, etc.
  • Social: Evaluates relationships with people, employees, communities, and any other stakeholders. Social factors include labour practices, human rights, gender diversity, community relations, etc.
  • Governance: Involves leadership oversight and direction, board diversity, executive pay, audits, shareholders' rights, intellectual property protection, etc.

ESG is an objective way to measure sustainability within organisations.

ESG Reporting in the Caribbean: Where Is It Happening?

In Small Island Developing States (SIDS) like those in the Caribbean, ESG adoption has been slow but is gradually gaining momentum.

While ESG adoption in the Caribbean is still in its early stages, it is, however, recognised as a key framework to promote sustainable economic growth in the region.  As a result, some sectors and countries are leading the way:

  1. Financial Services & Banking
  • In 2022, Republic Financial Holdings Limited (RFHL) amended its organisational structure to include a new Office of Sustainability, with the mandate to integrate sustainability into its strategic and operational processes. The office’s purpose is to steer RFHL organisation-wide ESG initiatives.
  • The Eastern Caribbean Central Bank (ECCB) Greening of the Caribbean Financial System programme aims to integrate climate-related financial risks into the Eastern Caribbean Currency Union’s regulatory systems and overall risk management of the financial sector. This initiative has received financing from the European Union.

2. Energy & Utilities

  • Caribbean governments continue to champion the use and transition to renewable energy sources such as wind, solar, and geothermal, which is heavily centred on climate change resiliency for the region. These efforts are recognised through regional entities such as CARICOM and the OECS, as well as international fora

3. Tourism & Hospitality

  • Sandals Resorts leads in environmental sustainability efforts, which is recognised through its attainment of the Master Level EarthCheck Certification Programme. EarthCheck is a globally recognised group specialising in benchmarking, certification, and advisory services. Its primary focus lies in the environmental and scientific dimensions of the travel and tourism sector. Sandals Resorts is recognised as the only hotel chain in the world to have six resorts currently holding Master Certification from EarthCheck.

Challenges in the Caribbean Context

Despite advances made, a number of challenges continue to exist in the region in fully integrating ESG:

  • Limited Regulatory Push: Unlike the EU’s Corporate Sustainability Reporting Directive (CSRD), most Caribbean nations lack mandatory ESG reporting laws.
  • Resource Constraints: Small businesses struggle with data collection and reporting due to limited expertise.
  • Cultural Barriers: Traditional corporate structures often resist gender and inclusion reforms.
  • Limited application of sustainability practices: Sustainability is still viewed through the lens of the environment and climate change in the region.

How GESI Professionals Can Accelerate ESG Adoption

In the Caribbean, ESG is often viewed primarily through an environmental lens, with a strong emphasis on climate change and natural disasters. While this focus is understandable given the region's vulnerability, it's crucial to recognise the equal importance of the social and governance aspects of ESG and how they are also critical for sustainable development in the region.

Dentons’ The Legal 500 Country Comparative Guide, 2024, examines ESG in the Caribbean, highlighting the region’s legislative strengths in supporting ESG implementation. However, the guide also identifies notable gaps, particularly in the social dimension of ESG frameworks.

There are, however, promising examples of how businesses can implement and enhance social sustainability within the ESG framework.  Sandals Early Childhood Centre for employees' children is a prime example of such a workplace initiative. By providing accessible childcare, the company supports working parents, particularly women, reducing barriers to employment and promoting workforce diversity. This aligns with the social pillar of ESG by fostering inclusive growth, work-life balance, and long-term employee well-being.

The involvement of GESI professionals is critical in designing social programmes, like Sandals’ Early Childhood Centre, which address systemic inequalities and equitable access. Their expertise helps organisations to social-proof their policies and programmes.

Beyond advancing the social dimension, GESI professionals play a critical role in strengthening the governance pillar of ESG. Inclusive governance is not just about compliance; it reflects how decisions are made, whose voices are heard, and how accountability is maintained within organisations. GESI experts help embed principles of equity, transparency, and representation into governance structures by advising on the composition of boards and leadership teams, promoting gender-balanced decision-making, and ensuring marginalised groups have a voice in organisational policies. They also support the development of anti-discrimination policies, grievance mechanisms, and codes of conduct that uphold ethical, inclusive leadership. By enhancing governance in these ways, GESI professionals help organisations build more resilient, trustworthy, and socially responsible institutions that meet both investor expectations and community needs.

ESG’s integration with GESI is particularly important as investors also demand greater transparency on diversity, equity, and ethical governance.Experts can play a crucial role in helping Caribbean organisations align with global standards. Here’s how:

1. Conducting GESI Audits and Benchmarking

  • Assess workplace policies (hiring, promotions, pay equity).
  • Identify gaps in diversity representation (gender, disability, LGBTQ+ inclusion).

2. Integrating GESI into ESG Reporting

  • Help firms develop Social (S) indicators—such as:
  • % of women, persons with disabilities, etc., in leadership,
  • Training programmes for under-represented groups,
  • Anti-harassment policies.

3. Advocacy and Capacity Building

  • Train executives on the business case for GESI in ESG (e.g., improved reputation, investor appeal).
  • Work with policymakers to encourage mandatory ESG-GESI disclosures.

4. Supporting Investor and Stakeholder Engagement

  • Assist firms in communicating GESI progress to international investors, development banks (IDB, CDB), and ESG rating agencies.

Caribbean firms are fully aware of the current competition for finite international capital. Access to this international capital, associated partnerships, and trade opportunities is increasingly tied to ESG compliance, which includes GESI commitments.

Conclusion: The Caribbean’s ESG Opportunity

While ESG, and particularly its social components, are still nascent in the Caribbean, the region has a unique opportunity to leapfrog into sustainable, inclusive business practices. Investors are increasingly demanding it, and progressive-thinking and purpose-driven businesses can gain a competitive edge by embedding all components of ESG into their organisational policies and strategies.

GESI professionals must step into advisory roles, helping businesses navigate this shift with data-driven insights and policy reforms. With the right approach, the Caribbean can become a leader in ethical, inclusive, and sustainable business.

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