What is esg?
…and Why should you include esg in your business strategy?
definition
"An environmental, social, and governance (ESG) strategy is the plan that an organization follows to ensure that it is being socially responsible, environmentally conscious, and well-governed. It involves integrating ESG considerations into the core business strategy and operations to drive sustainable growth and long-term value creation."
_ Deloitte, a leading global provider of audit, consulting, tax, and advisory services.
ENVIRONMENTAL
The impact a company has on the environment, including factors like carbon emissions, energy efficiency, waste management, and resource use.
SOCIAL
How a company manages relationships with employees, suppliers, customers, and the communities where it operates. This includes issues like labor practices, human rights, diversity, and community engagement.
GOVERNANCE
The internal practices and policies that govern a company, including leadership, executive pay, audits, internal controls, and shareholder rights.
How does an ESG strategy add value to your business?
A tailored ESG (Environmental, Social, and Governance) framework can improve a company's valuation in several ways:
1) Promotes a more ethical business model: ESG provides a holistic and comprehensive framework to promote ethics in business operations.
2) Risk Mitigation: By addressing environmental and social risks proactively, companies can avoid or reduce potential liabilities, regulatory fines, and operational disruptions. This risk reduction can lead to a more stable and predictable financial performance.
3) Operational Efficiency: Implementing sustainable practices often leads to more efficient use of resources, such as energy and water, which may enhance the company’s financial health.
4) Enhanced Reputation: Companies with strong ESG practices are often viewed more favorably by customers, employees, and investors. A good reputation can lead to increased customer loyalty and attract top talent.
5) Access to Capital: Many investors are increasingly prioritizing ESG factors in their investment decisions.
6) Regulatory Compliance: A tailored ESG framework helps ensure that a company remains compliant with current and emerging regulations. This proactive compliance can prevent costly penalties.
7) Innovation and Market Opportunities: Focusing on ESG factors can drive innovation as companies develop new, sustainable products and services. This can open up new markets and revenue streams, contributing to long-term growth and higher valuation.
8) Employee Engagement and Productivity: Companies that prioritize ESG factors often have more engaged and productive workforces. High employee morale and retention rates reduce turnover costs and can lead to better overall company performance.
In summary, a tailored ESG framework can enhance a company’s financial performance, reduce risks, open up new opportunities, and improve stakeholder relationships, all of which contribute to a higher valuation.
How can i support your business to develop their esg strategy?
I can support your company in developing or improving a tailored ESG framework, including clear KPIs with data collection tools and associated methodologies for documenting your ESG implementation. Incorporate ESG standards into your operational processes, including creating guidelines and governance structures.
These actions will provide you with clear indications on how to monitor, report, and grow your business’s ESG journey - positioning your company to attract investors and potentially qualify for new funding opportunities.
