The ongoing COVID-19 pandemic has taught everyone that sustainability is beyond tackling environmental risks. It is also about learning to adapt to the new changes and adapt to the ESG strategies for business growth. Are you wondering what this ESG conversation is coming from? Keep reading through to learn more.
What is ESG?
Many businesses these days are availing Environmental, Social, and Governance (ESG) advisory services to protect the interests of investors and the company’s success. In fact, companies that implement the ESG aspects are believed to have a higher valuation than those that do not. Let us have a segregated view of ESG aspects:
- Environmental concern is one the most talked-about issues these days that have far-reaching consequences if not addressed urgently. This involves how businesses use energy and manage their environmental impact and are they concerned about protecting the environment or not.
- The social impact of a business is also a significant part of ESG advisory services. It concerns how a company inspires its customers and followers to have a greater impact on society. The concern mainly involves sustainability in every possible form.
- Governance criteria require businesses to be transparent regarding their industry practices and follow regulatory standards. It also covers techniques and procedures to govern and make effective decisions.
Why is ESG important for business flourishment?
With establishing ESG standards and norms for business practices, many companies have adapted and started following them. On the contrary, the companies failing to act on ESG stands are already facing financial consequences and paying carbon taxes.
- The banking sectors and other financial institutes have successfully incorporated ESG rules into funding criteria which are pushing businesses to abide by the rules. The agenda behind this act is to achieve net-zero emissions and decarbonize the economy. This way, companies will show prominent evidence of having developed robust sustainability and ESG strategies and receive favorable lending options.
- Besides the lending companies, the private investors have also realized that the company that is concerned about the environmental impacts of their business will surely serve their customers well. This helps the businesses to engage valuable investors who are convinced that there are no revenue and lending risks involved with the business. Investors have started to relate ESG issues with investment risks and keep a close eye on the companies abiding by ESG norms. Investors also look for ESG performance ratings to ensure that they are engaging with the right business and generate sustainable long-term financial returns.
There are endless lists of benefits for businesses by implementing robust ESG strategies. By adapting to ESG standards, sustainable business practices are believed to attract more customers. It also enhances resource accessibility and lowers energy consumption, thus reducing operational costs. Sustainable practices also allow firms to attract valuable talent and uplift the morale of employees. If you wish to get government support and subsidies for your firm, abiding by the ESG norms is the one-stop solution.
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