By Oluwafemi Adeleke
ESG has become the familiar language of modern business. Companies speak fluently about climate change, employee wellbeing, diversity, and responsible sourcing. Investors probe ESG performance, regulators introduce new expectations, and customers and employees want assurance that businesses are acting responsibly. Yet within this crowded conversation, the letter G is often treated as the quiet one. Environmental issues are visible, a flooded coastline, a net-zero pledge. Social initiatives are easy to celebrate. Governance, by contrast, lives less photogenically in boardrooms, policies, and risk registers, surfacing publicly only in the difficult decisions that rarely make a sustainability report.
But governance may be the most important part of ESG, because it determines whether a company’s environmental and social promises can survive contact with reality. A business may announce a net-zero ambition, publish a sustainability report, and promise responsible sourcing — none of it, on its own, guarantees responsible business. The real question is whether the organisation has the governance to make that ambition real.
Governance, at its core, is about how an organisation is directed and controlled: accountability, ethics, transparency, leadership, risk management, and decision-making, and, crucially, what happens when things go wrong. Every organisation eventually faces difficult choices: pressure to cut costs, a supplier failing to meet requirements, an executive accused of misconduct. It is governance that determines how the organisation responds, and it is in those moments that governance is truly tested.
The international business environment is already moving in this direction, and the evidence is uncomfortable. The OECD’s 2026 Responsible Business Outlook, which examined the practices of the world’s ten thousand largest listed companies, found that 69 percent had publicly disclosed commitments relating toresponsible business conduct, yet fewer than 20 percent reported actually evaluating environmental or social risks among their suppliers, a gap the report described as part of a wider disconnect between commitment and action. The world’s problem, it suggests, is not a shortage of ESG policies but a shortage of effective implementation. Many companies know exactly what they are supposed to say; far fewer can demonstrate how those commitments shape their decisions.
That distinction plays out in everyday ways. A company can have an anti-bribery policy and still tolerate unethical payments; a whistle-blowing procedure and still cultivate a culture in which employees are afraid to speak up; a supplier code of conduct and still fail to investigate what happens beyond its immediate contractors. Governance is where policy meets practice — or fails to.
Consider something as ordinary as procurement. A supplier chosen for personal connections rather than competence is already a governance problem, and that single decision can cascade: poor-quality equipment, unsafe working conditions, ignored environmental standards, a failed project, a damaged reputation. One governance failure can become an environmental, social, and financial failure at once, which is why governance must be tightly connected to enterprise risk management, with the board understanding the risks that could materially affect the organisation, from climate change and supply-chain disruption to cybersecurity and corruption. Sustainability can no longer sit in a department with little influence over strategy; it belongs in the conversation about how the business makes money and creates long-term value.
This shift is visible in how sustainability reporting itself is evolving. The International Sustainability Standards Board’s IFRS Sustainability Disclosure Standards place governance alongside strategy, risk management, metrics, and targets, tying sustainability to how organisations are governed rather than treating it as a separate activity. A company should be able to explain who is responsible for sustainability risks, how the board receives information about them, and how those risks demonstrably influence decisions.
Which brings the board into focus. Boards need not become environmental scientists or cybersecurity engineers, but they need enough understanding to challenge management and ask the right questions. A board that approves a major investment without understanding its climate exposure, or that accepts impressive ESG figures without asking how they were generated, is not exercising effective oversight. Good governance requires curiosity, independence, and the courage to ask uncomfortable questions, and, beneath that, accountability, because someone has to own the issue.
Too often, ESG becomes everyone’s responsibility and therefore nobody’s. Sustainability teams prepare reports; HSE manages environmental issues; HR handles social matters; compliance manages regulation. But who brings this together, and ensures an ESG commitment is actually reflected in procurement and executive performance? Without clear accountability, ESG fragments, and a fragmented commitment is barely a commitment at all.
This matters particularly for African businesses at this moment. Africa is experiencing rapid economic and infrastructure development, and companies across the continent are entering international supply chains, interacting more with global investors and multinational customers. That creates opportunity, but also expectations. A company in Nigeria may sell to customers in Europe; a mining company in Africa may sell into markets with demanding responsible-sourcing requirements. Governance, in this environment, has consequences beyond national borders, a company that ignores supply-chain risks may discover that its international customers do not share that indifference.
This is one reason responsible due diligence matters so much. The OECD notes that many significant environmental and social impacts occur within supply chains rather than a company’s own operations, and its 2026 assessment found companies far more likely to report having policies than to report identifying and addressing actual impacts. A business cannot simply say, “that is our contractor’s problem”, if the contractor operates on the business’s behalf, the risk eventually becomes the business’s own. Responsible governance does not require controlling every supplier’s every activity; it requires understanding where the significant risks lie and applying due diligence proportionate to them.
Which brings governance into data. As companies collect more ESG information, its quality matters proportionally more. Carbon figures, safety statistics, and supply-chain information now feed directly into decisions and disclosures, and inaccurate data produces inaccurate decisions. ESG information needs controls, clear ownership, verification, and assurance — its governance is fast becoming as important as the governance of financial data has long been.
There is a cultural dimension too, and it may be the hardest to legislate for: a company can have excellent governance documents and still have poor governance in practice, because culture is what happens when nobody is watching. If employees believe revenue matters more than integrity, they will behave accordingly; if managers are rewarded for hitting targets regardless of how, the organisation may unintentionally encourage the misconduct its policies were written to prevent. Leadership sends signals that often carry more weight than any policy document, employees notice when executives take safety seriously and when whistle-blowers are protected, and they notice, too, when leadership looks away because someone is commercially valuable. Culture is built through the accumulation of decisions like these.
That is why the G in ESG is, at bottom, a question about trust. Investors need to trust the information companies provide; employees need to trust their leaders; communities need to trust the organisations around them. That trust takes years to build and can disappear in a day, which is why the OECD reported in 2026 that 84 percent of its member countries now had some form of due-diligence legislation, increasingly extending into sustainability reporting and responsible business conduct.
Businesses should stop thinking of governance as belonging only to listed companies or multinationals. Every serious organisation needs it, at whatever scale, a small company needs ethical procurement, a manufacturer needs safety oversight, a technology company needs data protection. The principle does not change with size; governance should simply grow with the organisation it serves.
Perhaps the greatest mistake a business can make is to treat ESG primarily as a reporting exercise. The stronger approach is to embed it into the actual operation of the business, so it shapes strategy, investment, procurement, and how difficult decisions get made. That is the point at which ESG stops being communication and starts being management.
The future belongs to organisations that understand this distinction. The strongest companies will not necessarily be the ones with the longest sustainability reports; they will be the ones whose governance systems can withstand scrutiny, organisations that know who is accountable, know where their risks lie, and can demonstrate that their public commitments are backed by evidence rather than aspiration.
The G in ESG may not be the most visible letter. But it may well be the one holding the other two together. Without governance, environmental commitments risk curdling into greenwashing, and social commitments into corporate publicity. With strong governance, ESG becomes part of how a company thinks, decides, and manages risk, part of how it creates value capable of surviving beyond the next financial year.
For every business, that is the real governance question, not whether you have an ESG policy, but whether your organisation is governed well enough to make that policy real.
