The ESG age has arrived: get ready to integrate the ESG Factors into your business for strategic reasons, not just compliance
The environmental, social and governance (ESG) factors were first mentioned in the 2005 study entitled “Who Cares Wins”. They are now the building blocks of a sustainable business. They are about the planet and people as well as the durability of the business.
ESG is about strategy
Today, investors around the world increasingly want to invest in sustainable businesses. And regulators in most countries, led by the EU, are preparing new rules requiring businesses to provide better ESG disclosures, protecting investors from greenwashing.
The basics of ESG:
- The E factor includes the use of energy, water and other resources of your business
- The S factor includes relations with all the stakeholders of your business
- The G factor includes your ability to prepare for risks and opportunities
Businesses need to integrate the ESG factors into their strategy, then implement the actions that improve them as part of the overall strategy with the support of every part of the organisation, and finally report progress to stakeholders.
ESG is a long project
Integrating the ESG factors into your business is a long journey of change, i.e. a long project. But they will make it easier and cheaper to finance and insure your business and attract talent and partners. This is true for both small and mid-sized businesses (SMBs) and larger businesses.
The first step your business should take to start the ESG journey – task a person or a small team to assess your current ESG state and plan your impact journey:
- The assessment should include the ESG policies you need, ESG metrics you need (there are many standards to choose from), data points you need, UN Sustainable Development Goals (SDGs) you can pursue, and a system for tracking progress
- The plan should include the roadmap to get to the ESG state that your investors and other stakeholders want to see in the future
The person or team could be either from your organisation or external experts. The key is that they must have the full support of the board.
The time to integrate ESG into your business has arrived. Because regulators, investors, partners, employees, clients/ consumers and competitors want to see a better ESG state. And because it is the right thing to do for the long-term health of your business – and the planet.
Ultimately, ESG factors should become an ongoing business process, for both strategic and compliance purposes.
To learn how we can help your businesses manage the ESG Factors Integration: