What is ESG?
ESG refers to the three vital pillars in measuring an investment’s sustainability and societal impact on a company or business. These criteria help to determine the future performance of companies, as well as their long-term viability.
The environmental component of ESG measures a company’s and industry’s environmental impact, such as carbon footprint, pollution, sustainability practices, and future environmental goals.
Environmental factors may include a company’s energy use, waste, pollution, natural resource conservation, and animal treatment. The criteria can also be used to assess any environmental risks that a firm may face and how those risks are being managed.
For example, it may have concerns with its ownership of contaminated land, the disposal of hazardous waste, the management of toxic emissions, or compliance with government environmental requirements.
Why should this be a priority for any business?
Human activities are rapidly impacting the Earth and its components positively and negatively at local, regional and global scales. Due to this, we are facing many environmental issues such as climate change, increased Greenhouse Gas emissions, contamination & depletion of water resources, and an increase in energy consumption from the resources such as coal, oil, and fossil fuels, and biodiversity continues to decline.
In this regard, it’s crucial to understand and address global environmental problems not only when they are global at a scale but as soon as a direct relationship can be established for any process for its potential impact on the environment by any organisation. So companies need to identify how these climate-related risks, opportunities and financial threats impact the organisation’s revenues, expenditure, assets and capital investing.
The social component of ESG can be divided into several categories, but the following four are generally addressed: relationships, community relations and human rights, health and safety, diversity and inclusion.
The way a business treats employees influences employee retention and productivity. From a profitability standpoint, happier employees are more productive. A company’s relationships with the larger social circle, including clients and suppliers, can also have a direct financial benefit.
Community Relations and Human Rights
Community relations are concerned with how your business benefits or damages the local community. Hires from inside the community, charity, and local sourcing are all quantifiable.
Human rights, in general, are an essential pillar of social evaluation. Internal policies must be scrutinised, and human rights violations must be identified throughout the supply chain, as part of ESG strategy. Due diligence is expected to protect investors from backing companies with poor human rights histories.
Workplace Health and Safety
Environment, Health and Safety (EHS) management is a significant factor in evaluating “S.” EHS is concerned with the health and safety of workers and their surroundings. Since the pandemic, public and investor scrutiny of EHS has become even more critical.
Diversity and Inclusion
Gender and cultural diversity improve corporate governance, talent attraction, and human capital development – all of which are essential elements in determining long-term competitiveness. Corporate diversity policies represent a well-managed organisation that recognises the significance of diversity in sparking creativity and enhancing production, in tandem with employee well-being.
Governance refers to the internal set of processes, rules, and procedures that your company uses to manage itself, make effective choices, comply with the law, and meet the needs of external stakeholders.
In the context of ESG, governance refers to how company leaders manage a firm. How successfully do high management and the board of directors address the concerns of the company’s stakeholders, employees, suppliers, shareholders, and customers?
Financial and accounting transparency and thorough and honest financial reporting are frequently regarded as essential components of good corporate governance. It is also critical that board members work in a harmonious relationship with investors and prevent conflicts of interest. Is the board of directors and corporate management a diverse and welcoming group?
Investors may want to know that a company’s accounting systems are accurate and transparent, and that stockholders have the right to vote on crucial issues.
Manage your Sustainability Journey
Corporate sustainability has become a priority and value generator for organisations everywhere; it’s time to protect our future generations and get on the same page about ESG.
How can our Sustainability Assessment tool help your business?
Measuring your company’s ESG performance is no longer a box-ticking exercise. It is about changing your business and approach to focus on building a better future and creating a new path. A path that consistently adds value and fosters trust in business, the economy, and society.
How do you start this journey?
We created this tool to assist you in determining your starting point to create a course of action.
Our ESG assessment tool will enable your organisation to report accurately on ESG to gain sustainability, ensure resilience, and deliver impact within your network of partners, suppliers, and third parties vital to your operations.
It will provide you with the data you need to drive and quantify improvements in ESG and the tools and insights to positively impact your business operations and achieve a more sustainable future.