What is ESG?
Environmental, Social and Governance (ESG) is the term used to identify matters that are traditionally associated with sustainability or corporate responsibility – focussing on the impact on the environment and wider society. ESG factors have a potential material financial impact on organisations short and long-term value, so are increasingly important as companies emphasise equitable and inclusive long-term value creation, which can play a vital role in exit planning, where increased Market/Shareholder Value is concerned.
Why businesses need ESG
ESG performance reporting is now an essential consideration for all businesses. For large companies, it is mandatory. For small and medium enterprises, it is expected and will become mandatory. Being able to report on ESG can create positive communications to place a business in prime position to attract resources – that could be income from contracts through procurement and tendering, accessing financial investment for growth and attracting talented employees.
Stakeholders and investors are increasingly focused on climate and ESG-related factors that drive decision making. Evidence shows that companies with strong ESG performance reporting deliver higher returns on investments, lower risks, and strengthen resilience in the market and agility to navigate challenges and crises. Ultimately, ESG leads to great market value.
With increasing pressures from government, consumers, and investors to prioritise sustainability, it is essential that all organisations are working to show how they take account of ESG in their business and engagement with others in the economy and community.
The benefits from ESG
ESG reporting is part of best practice and shows the organisation is transparent with stakeholders about their approach to environment, social and governance matters. It delivers enormous value to the business immediately through the ESG process and in disseminating the results for positive positioning and competitive advantage. Those ignoring ESG will be left behind and open additional risks to survival and growth – ESG is quickly becoming an essential part of operating a business or organisation.
How to report on ESG
The need for ESG has led to the development of many commercial measurement frameworks being marketed. There is no one framework that suits every business and it is essential to find an approach that suits the organisation, the industry and the market context. Developing your own reporting framework is most likely to lead to practical use and further development as part of future “business as usual”.
Accessing ESG skills
Skilled professionals to assist in creating an appropriate framework are in short supply. Demand is increasing and it will be important for organisations to be prepared for ESG and implement it as part of the culture within the business and through supply chains.
Our partner Nataliia Hinde, can assist by providing the appropriate professional support and expertise to create and develop an ESG reporting framework that will be embedded within the organisation.
This will be created with you and your team. The outputs will be specific to your organisation and practical for immediate use in addressing your needs. This will enable you to demonstrate accountability and how your positive actions consider the environmental, social and people impacts. A system for analysing and reporting on ESG evidence will be put in place to help you position the organisation as a credible leader in ESG. Having this will deliver multiple positive benefits immediately for competitive advantage and sustainability.
Summary of benefits from ESG reporting:
- Strong ESG policies help companies improve efficiency of operations, more economic use of resources, reduce costs (e.g. Energy, water, waste, repair, recruitment).
- Strengthen business profile as being socially and environmentally responsible.
- ESG is a part of contract award and investment decision making processes.
- Identifies areas for innovation and growth around strengths and addressing areas of challenge and capacity building.
- Aligns the organisation focus on People, Profit, Planet approach in markets.
- Motivates staff and contractor morale/productivity and help retain/attract talent.
- Increased Market/Shareholder Value
What’s next?
Arrange an introductory conversation around a bespoke presentation to the organisation.