Have you ever wondered why certain companies perform better than others? The answer has three letters, and it is ESG.
Whether you are a startup or an established business organization, ESG reporting and investment is the framework to stay relevant to the current industry trends and practices.
Furthermore, you can even compare the ESG to the radar system that encapsulates everyone in the ecosystem.
What is ESG?
ESG is the abbreviation of Environmental, Social, and Governance. These three are the key components that refer to the factors measuring the sustainability and the ethical impact of the businesses and companies.
Most investors who seek to invest in companies look at the ESG scale of the company. Therefore, if the company fails to pass the ESG standards, it fails to win over investors for the company.
If we go with the definition, ESG is a generic term used in the capital market. It is commonly used by investors to evaluate the behaviors and future potential of the company.
What falls under ESG?
1. Environmental
It examines how the business performs to safeguard the natural environments.
It focuses on:
- Resource depletion.
- Waste and pollution.
- Greenhouse gas emission.
- Climate change.
- Deforestation.
2. Social
It looks at the social behavior of the company and how it treats other people.
- Employee relations and diversity.
- Healthy & Safety.
- Working conditions.
- Conflicts.
- Local communities.
3. Governance
It examines the credibility of the company policies and how the business operations are governed.
- Executive remuneration.
- Tax strategy.
- Donations and political lobbying.
- Corruption & Bribery.
- Board diversity & structure.
If you are a company and would like your company to be ESG compliant, contact Diginex. They are an award-winning agency that ensures your company gets ESG complaints.
How Can ESG Bring Value To Your Company?
When it comes to ESG, corporations are looking at it as a business opportunity. These include new markets they can open and sell to, cost reduction, and integrated risk management.
So, what are we waiting for? Let’s dive into it.
1. Top-Line Growth
A strong ESG proposition allows the companies to tap into new markets and expand themselves into the existing market. When the government authorities find that you are doing something for society, they are more likely to be awarded the license, access, and approvals to grasp opportunities for growth.
In addition, ESG can also drive consumer preference. If the consumer finds that the company they are dealing with or investing in is taking action to protect nature and society, consumers show more interest and are willing to pay more to go green.
2. Cost Reduction
Among the many advantages of ESG, one of the major advantages is that it can help you with cost reductions. In addition, executing ESG effectively can help the organization combat rising expenses.
With the ESG, you can see the flow of the expenses and put a lid on unnecessary expenses. This will close the finance lease and significantly reduce business operating costs.
3. Reduce Regularities
A stronger external value proposition can help the organization achieve greater strategic freedom and help ease regulatory issues.
We have seen that most business actions are put to a halt by the government authorities because of many reasons. However, with the ESG compliant business operation, companies can reduce the risk of adverse government action.
4. Boost In Employees Productivity
Just paying a high salary package will not ensure you with talented employees. It is the company’s belief and principle that attracts talented individuals. A strong ESG proposition can help you attract talented employees to the organization.
A recent study shows that positive social action correlates with job satisfaction. With the ESG, you can ensure that your employees feel that they are giving something back to society, making them feel satisfied by what they are doing.
ESG For The Long Term
ESG is a long-term solution for companies that are finding it hard to expand their business. Although ESG alone might help develop your business, it will certainly help remove the restriction from your business.
