What is ESG? Why Is ESG Important? What are the Benefits of ESG in Businesses? How Can Businesses Become ESG Compliant?
“The environment, social, and governance (ESG) reporting landscape is of growing importance as business activity is firmly linked to environmental, social and governance factors. Businesses are being held to account not only through traditional reporting but increasingly by investors, consumers and other stakeholders who seek to ensure that companies have the answers to questions about their sustainability performance.”
The average business owner is likely to be reading these words for the first time in their professional lives. Indeed, most business owners might not have even heard of ESG (environmental, social and governance) reporting before.
And that’s fine. But it’s a phenomenon that will likely be on their radars within the next few years, and certainly within the next decade.
By now, you’ve likely heard of the term “ESG.” It’s more than likely that you understand that it’s something your company needs to take into consideration when making business decisions.
But what is ESG? And how, exactly, is it relevant to your business?
The answers to these questions are absolutely critical to your business and its future. So if you’re looking to get ahead of the curve and position your business in a way that makes you more attractive to consumers, employers, investors, lenders and other stakeholders, then this article will provide you with the information you need to do just that.
ESG is Essential for Your Business
It was only a few years ago that ESG was rarely mentioned in the business world. But today, those discussions have become both more common and much more important. Nowadays, major companies around the globe are being asked to report on social and environmental practices as part of their accountability to stakeholders.
Several countries have enacted laws that require public companies to report on these measures.
In addition to public reporting, ESG factors have been factored into the bottom line for years, primarily through the work of socially responsible investors.
Nowadays, socially responsible investors represent 7 to 10 percent of the total investor population, and their influence in boardrooms is growing rapidly.
If you want to stay ahead in the global business world, ESG is a framework which you will need to start implementing today.
Advantages of an ESG compliant business go far beyond the obvious.
- Winning new clients & business
- Increased customer retention
- Developing and enhancing relationships
- Attract and maintain happy staff
- Save money on energy and costs
- Point of difference from your competitors
- Promote innovation and learning
- Improve your business reputation
- Encourage investment and funding
- Positive publicity opportunities
- New marketing opportunities
- And more...
But what exactly is ESG?
ESG is all about creating value, and business need to create value. They have to create value for customers and for stakeholders. They have to add something worth more in the world than whatever it costs to create or distribute that something.
One way to create value is to measure your results. You can’t manage what you can’t measure. And you can’t do what you haven’t measured.
You can add value by addressing some of the issues below.
Examines a company's environmental stewardship practises. For instance, resource depletion, waste management, climate change, energy use, emissions output, and more.
Investigates how a business handles its interactions with the community, suppliers, employees, and customers. For instance, safety, employee relations, diversity, and the effect on local communities.
Relates to corporate governance. For instance, executive compensation, shareholder rights, diversity on the board, and structure audits.
The ESG framework provides businesses with the tools needed to implement measurable ESG strategies throughout their organisations.
If you are going to continue to do business in today's global economy, you will need to start implementing ESG solutions now, if you haven't already.
Terran Industries' services will allow your businesses to quickly and easily meet many of your ESG targets. Our services are designed to accelerate your transition into the Green Economy, allowing you to meet and exceed your ESG objectives.
ESG = ENVIRONMENTAL SOCIAL GOVERNANCE
ESG is definetely the way to go
Very important in business.