In recent years, there has been growing interest in the concept of Environmental, Social, and Corporate Governance (ESG) as a framework for evaluating the sustainability and ethical practices of companies.
Let’s take a closer look at each of these pillars and what they entail and why they attract investors.
Focusing on environmental impact includes factors such as carbon emissions, water usage, waste generation, and resource depletion. Companies that are committed to environmental sustainability aim to minimize their negative impact on the environment. Companies can do so by reducing their carbon footprint, conserving resources, and implementing sustainable practices.
Focusing on societal impacts include labor practices, human rights, and community relations. Companies that prioritize social sustainability aim to create positive social impacts by treating their employees fairly, respecting human rights, and engaging with their local communities.
The corporate governance pillar of ESG focuses on the internal management and control of a company. This includes factors such as board diversity, executive compensation, and transparency in reporting. Companies that prioritize strong corporate governance aim to ensure that their operations are ethical, transparent, and accountable.
By considering all three pillars of ESG, companies can create a comprehensive framework for evaluating their sustainability and ethical practices. This approach can help companies identify areas for improvement and make changes to become more sustainable and responsible.
ESG: Every Investor’s Must-Have
Investors are increasingly interested in ESG factors when evaluating companies for investment. In fact, a recent survey found that 93% of investors consider ESG factors in their investment decisions.
Why is this happening? The answer lies in the fact that ESG investing represents a new way of combining financial return with social responsibility.
Investors want to put their money behind companies that make profits and also have a positive impact on society, and the environment. With ESG investing, they can do both and make a sound long-term investment! Companies that score high on environmental and social measures tend to be more resilient over time as they face fewer risks related to climate change or other external factors.
The ESG business strategies that benefit the company, like improved operational efficiency, cost savings, lower employee turnover, innovation, reduced compliance costs, and risk management – all help to increase the shareholder value.
By prioritizing ESG factors, companies can attract investment from socially responsible investors who are looking for companies that are committed to sustainability and ethical practices.
Overall, the concept of ESG is an important framework for evaluating the sustainability and ethical practices of companies. By taking into account environmental, social, and corporate governance factors, companies can create a comprehensive approach to sustainability and attract socially responsible investors.
Connect with one of our ESG consultants to discuss your organization’s ESG and sustainability strategy. The business experts at CANSULTA are ready and eager to assist you.