In addition to financial gains, businesses and investors may reap other benefits from adopting an ESG strategy. Investments in ESG-focused brands are often considered low-risk, which is great news for both businesses and their investors.
To give you an idea of what ESG can do for your company, here are five advantages:
- Offers Leverage.
Businesses that invest in ESG initiatives improve their standing in the market. Customers, staff, lenders, and regulators are all interested in ESG measures. Executives who work to enhance working conditions, diversify their workforce, give back to the community, and advocate for social and economic justice may do wonders for their company’s reputation.
- Entices Financiers and Investors.
Companies are increasingly following a trend toward the inclusion of ESG data in their financial reports. Companies that prioritise ESG and make their sustainability efforts transparent through ESG disclosures are gaining a lot of interest from investors and lenders. According to a recent poll by Gallup, over half of all investors are considering sustainable investment vehicles.
- Enhances the Bottom Line.
To put it simply, ESG makes a company more attractive to lenders and can boost the company’s bottom line. A company’s bottom line and return on investment can benefit from even the smallest sustainable actions, such as eliminating paper usage, recycling, or installing energy-saving modifications.
- Increases Consumer Loyalty.
People are more loyal to businesses that treat their employees and customers with respect and are prepared to pay a premium for companies that share their core beliefs. The socially conscious customers of today are more curious in the charitable work of the companies they patronise. Companies that are committed to environmental, social, and governance (ESG) principles are more likely to keep and gain consumers if they are open about those efforts and receive positive feedback from those they serve.
- Grows Longevity of Company Operations.
Companies that make ESG investments are better able to survive in, and adapt to, a dynamic market. Although ESG requirements are now only in place for publicly traded corporations in a handful of countries, it appears that the rest of the business world will soon follow suit. Businesses that disregard ESG standards now may face legal, regulatory, reputational, and compliance concerns in the future. Businesses that successfully incorporate ESG concepts into their operations are able to minimise their operating expenses by lowering their energy use, their resource waste, and their total consumption.
Companies are required to report on energy use and Scope 1 and 2 emissions within the UK. Starting in 2023, ESG reporting in the UK will be further formalised through the Sustainability Disclosure Requirements (SDRs).
We’re living through a period of extreme change and uncertainty. For businesses, it has become imperative to be transparent and proactive in the implementation of environmental, social and governance (ESG) principles.
Does your business have a clear ESG strategy? The environmental and societal benefits of ESG initiatives have long been clear. But now the business advantages are becoming more apparent, those who fail to demonstrate their credentials risk being left behind for good.