It is hard to read the news these days without the three letters being mentioned at some point. Often, it is either very large companies talking about their agendas, because they have to, or news from the investment world.
So why would a company that isn’t being forced to put together an agenda or strategy, bother? Isn’t it just a nice to have?
Well, what hasn’t been explained particularly well in the past is how a small or medium businesses can use the ESG principles and frameworks to apply to their business and the benefits that can come from it. The way we see it is that for those companies not forced by regulation, there is a huge opportunity to assess their position and tailor a bespoke plan tied to their overall business strategy.
It has been proven many times, that ESG is firmly linked to the following benefits:
Improved financial performance
A focus on ESG can help win tenders or make products more attractive to socially/ environmentally conscious consumers, whether B2B or B2C. It can also result in cost savings, especially in buildings or offices. Don’t forget, there are favourable tax allowances aimed at innovation and installing environmentally friendly equipment. Companies with strong ESG strategies are also more likely to attract socially responsible investors, which can increase their access to capital and improve their financial performance over the long term.
A strong ESG strategy can help companies build a positive reputation with customers, employees, and other stakeholders. This can lead to increased loyalty, brand awareness, and market share. Depending on what your competitors are doing, this may be the differentiator for your business in the market.
By focusing on environmental, social, and governance issues, companies can identify and mitigate risks associated with issues such as climate change, regulatory fines, labour practices, and supply chain management.
A strong ESG strategy can drive innovation and help companies identify new business opportunities. For example, by developing more sustainable products and processes, companies can create new markets and differentiate themselves from competitors.
Improved employee engagement
Companies with strong ESG strategies are more likely to attract and retain top talent, as employees increasingly value socially responsible and sustainable workplaces. Additionally, employees who feel that their company is making a positive impact are more likely to be engaged and motivated at work, resulting in a productivity uplift.
Measurement of key metrics will help the business understand what the starting point is and will provide insight into drivers needed to achieve goals.
Positive impact on society and the environment
Ultimately, a strong ESG strategy can help companies make a positive impact on society and the environment. By prioritizing sustainability, ethics, and transparency, companies can contribute to a more equitable and sustainable future.
Meeting customer expectations
Consumers are increasingly demanding that the companies they do business with act responsibly and sustainably. By prioritizing ESG, a small company can meet these expectations and build stronger customer loyalty. Companies should consider the supply chain that they are in and what the larger companies will be looking for.
Attracting and retaining employees
Employees are increasingly looking to work for companies that align with their personal values and demonstrate a commitment to social responsibility. By prioritizing ESG, a small company can attract and retain top talent.
Overall, prioritizing ESG can help any company build a more sustainable and resilient business, attract investment and customers, and attract and retain top talent.