ESG stands for Environmental, Social and Governance. It’s a key way that businesses can offer value to their stakeholders and contribute to a socially-conscious, sustainable world.
- Environmental – climate change, carbon emissions, waste and pollution management, renewable energy and clean technology, and consideration of the rights of First Nations peoples to their land
- Social – employee wellbeing and development, health and safety, human rights, ethical supply chain standards, privacy and data security, and community impact and engagement
- Governance – board diversity, executive pay, corruption, business practices and ethics, risk mitigation and management, transparency, and ESG reporting
As stakeholder expectations shift, ESG is more important than ever. Customers want to support socially responsible brands, employees want to feel that their work is having a broader social impact and investors are increasingly prioritising ethical investing.
By integrating ESG, you stand to benefit from better brand reputation, increased employee satisfaction, a more stable consumer following and higher levels of investment.
In fact, ESG has become such a common practise that it’s no longer about getting ahead. It’s about not being left behind.
Simon O’Connor, CEO of the Responsible Investment Association of Australia, told the Australian Financial Review that “we are nearly at a point globally where really traditional investment is dead.”
“Investing without a consideration of environmental, social and governance (ESG) is almost no longer tenable in Australia or globally because fundamentally this is being driven by compliance, by competitive performance and by client interest.”
How to integrate ESG into your business
Address each of the three ESG pillars (environmental, social and governance) and work through strategies to incorporate these into your business. You may need to appoint more resources and dedicated personnel to ensure your business achieves it’s ESG objectives.
Environmental ESG compliance is often a top priority for businesses, with many committing to net zero emissions by 2025. Innovative blockchain technology now makes it possible for businesses to match their electricity usage with locally-sourced renewable energy directly from specific generators.