Is ESG is a burning platform for business.

Is ESG is a burning platform for business? Yes, #ESG (Environmental, Social, and Governance) is a burning platform for business and will continue to be so in the foreseeable future. ESG is not only a moral imperative, but also a strategic imperative for businesses that want to thrive in the long term.

Over 90 percent of executives surveyed in 2022 consider sustainability and ESG either important or very important to driving enterprise value however roughly 50% of boards still don't understand ESG.

The business case for investing in ESG is strong as it impacts the value chain of organisations across industry sectors.

Significant factors pertaining to business.

Regulation: ESG helps reduce the risk of adverse government intervention. Likewise for government and private buyers ESG considerations are often included on tenders and require buyers to integrate ESG activities into their operations.

Cost reduction: Sustainable programs helping to increase efficiency and reduce the overall cost of operations. This can come by way of lower energy consumption or switching to renewable alternatives and improved waste management practices, circular economy and carbon emission reductions.

Staff, business, and community engagement: ESG provides organisations an opportunity to reinforce company values, increasing engagement and reducing the cost and lost skills burden of staff turnover. 71% of employees noting they would consider a decrease in pay to join an organisation that is aligned with their values.

According to a comprehensive Macquarie University study, Millennials in particular expect their employers to behave ethically and sustainably, with nearly one in five willing to sacrifice up to 40% of their salary to work for a responsible employer. Communities also expect more from business and seek community benefit from your operations.

Capital Investment: ESG attracts investment - Global sustainable investment now tops $30 trillion. Globally more than $1 trillion dollars has been invested into ESG investment funds in the past two years alone.

ESG also protects investment - Over half of the world’s economy is dependent on natural capital. One fund manager estimated that more than 30 percent of their $300 billion USD portfolio is exposed to nature-related risks.

Cost Reduction: lower energy consumption & improved waste management practices.

Staff, Business & Community Engagement: Increase engagement; decrease turnover; reinforce company values. Millennials expect their employers to behave ethically and sustainably, with nearly 1 in 5 willing to sacrifice more than40% of their salary to work for a responsible employer according to a Macquarie University study.

Social Licence to Operate: Considering a company’s social licence stakeholders has become a business imperative over the past couple of years following high profile violations both in Australia and overseas.

Enhanced Operational Efficiency: Skill development and capacity building; supply chain operational enhancement; productivity uplift.

Environmental resilience: Over half of the world’s economy is dependent on natural capital. One fund manager estimated that more than 30 percent of their $300 billion USD portfolio is exposed to nature-related risks –source: PWC.

Regulation: ESG helps reduce the risk of adverse government or legal intervention

Access to New Market Opportunities: More sustainable expressions of your products and services will likely open new markets. Organisations driven by purpose demonstrating post compound annual growth rates of 9.85% compared to 2.4% for the S&P 500 overall.

Top line growth: B2B and B2C opportunities through improved sustainable policies and practices; Upwards of 70 percent of consumers are willing to pay more an additional 5 percent for green products.

Capital Investment: Global sustainable investment now tops $30 trillion. Globally more than 1 trillion dollars has been invested into ESG investment funds in the past two years alone.

What Now?

If the above commentary has piqued your interest in ESG why not attend our upcoming Masterclass on the Foundations of ESG.