Gaining a Business Advantage by Aligning to ESG
–Chamindra de Silva and Ranusha de Silva
COVID-19 lockdowns caused fossil carbon dioxide emissions to decline by an estimated 2.4 billion tonnes in 2020, as reported by the data in the Earth Systems Journal. Whether this was Mother Earth’s way of intervening and saving us from a larger calamity might never be known. The pandemic and global warming alike are crises that will continue if we do not work together globally. Without cooperation, new strains will soon develop, and our locked down environment will continue in the rapid onset of disaster.
In a similar way, businesses have to work in unison to enact change and address Environment, Social and Governance (ESG) issues. But unlike COVID, root causes are hard to trace precisely, and will instead show up in an increase in flooding, famine and fires. We all know that the continuation of economic development without concern for ESG issues will only negatively impact the communities and planet we live in. All the wealth accumulated will have even less of an impact on happiness and stability.
Whilst groups such as Greenpeace and Extinction Rebellion’s brave and yet drastic measures might cause headlines, driving a global ESG and responsible investing program might be a more structured and profitable way towards the same goals. This is because even if you abhor any form of tree hugging, investing in ESG can actually result in many traditional business advantages from lowered total cost of operations (TCO) as well as improved scalability, employee morale, and stakeholder engagement. In this article, we hope to explain the many no-brainer business benefits of aligning to ESG.
ESG represents a more stakeholder-centric approach to doing business. Companies that adhere to ESG standards agree to conduct themselves ethically in those three areas, which are interconnected.
Environment includes the energy inputs and outputs of your company, the resources it requires and the consequences of its extraction and usage.
Social is focused on the company reputation or social standing with their employees, suppliers, lawmakers, customers and society as a whole.
Governance highlights the importance of compliance with the law, effective decision making, use of efficient practices, execution of strategies and last but not least, meeting the needs of all a company’s shareholders.
Read the full article published on Oxford Business Review here https://oxfordbusinessreview.org/gaining-a-business-advantage-by-aligning-to-esg/
Photo from Pexels.
10 September 2021