ESG and Corporate Social Responsibility
The pandemic has been a wake-up call in crisis management for governments, businesses, and individuals. Companies are still trying to adapt to the drastic and varied effects of COVID-19, and this has affected the way that our systems react to future crises, especially climate change.
The inclusion of Environmental, Social, and Governance (ESG) leadership is rapidly growing in companies throughout the world and is transforming sustainable business decision-making. So what exactly is ESG? ESG encompasses socially conscious investment and leadership strategies. The three factors of environmental, social, and governance help quantify innovative opportunities and mitigate risks in the supply chain. It is also known as sustainability reporting.
What is ESG?
ESG prioritizes transparent business project planning by ensuring that management-level executives set the tone for long-term sustainability decisions. The combination of both financial materiality and social materiality helps in focusing on multi-faceted goals related to company performance and social fulfillment. This can look like mitigated impact on natural resources, improved employee wellbeing, and financial payoffs. ESG has been appraised by environmentalists as a means of climate education and science communication. It has also been pivotal in attempting to price externalities, which have been an environmental degradation issue for decades. Studies have shown that companies with well-articulated ESG strategies have better access to capital and investors.
ESG and the environmental cause
For the most part, ESG has widely focused on the environmental aspect. Large corporations have been proactive in making ambitious environmental goals, such as carbon emission reductions, renewable energy transformations, and decreased natural resource usage. The social aspect of ESG advocates for improved working conditions, as well as activism for justice issues outside of the workplace. Ethical sourcing, data security, labour practices, working conditions and mental health are all key issues. The governance aspect focuses mainly on executive-level decisions regarding diversity and inclusion, finance, and business ethics. These are all aspects that affect brand reputation -- therefore, ESG is inherently tied to making social changes within organizations that can influence national, and even global movements regarding social and climate justice.
Incorporating ESG into your business
So what can you do? Companies can start integrating ESG standards (GRI, SASB) and frameworks (TCFD) into their long-term business plans. Identifying directors and employees that would be suitable for ESG committees will promote accountability, engagement, and education. There is long-term value in aligning with ESG standards: research shows that it helps with company reputation and valuation. The rise of proxy advisory firms, ESG rating services, and credit rating agencies like the MSCI are growing to make accurate data-driven insights on the corporate ESG status. Companies that have been proactive in including ESG in their business framework have shown increased customer satisfaction, service quality, employee engagement, diversity, and accomplishment of environmental goals.
The holistic, multi-faceted nature of ESG is not only beneficial, but required for companies to adapt in the post-pandemic world. ESG is becoming increasingly popular in various industries globally; instilling powerful core values within companies to affect change elsewhere.
Learn about our affordable carbon footprint solutions for small and medium-sized businesses
Book a free strategy session to discuss your climate goals with a sustainability manager.
About RyeStrategy
Based in Seattle, RyeStrategy is a CDP-accredited, mission-oriented company specialized in carbon accounting, mitigation coaching, and climate disclosure solutions for organizations at any point in their sustainability journey. Learn how RyeStrategy helped Salesforce, Ideascale, and Wazoku achieve their sustainability goals.
From exhaustive carbon footprinting and mitigation coaching, to setting science-based targets and reporting climate data to CDP, SBTi or custom reporting platforms, RyeStrategy acts as a hands-on extension of the team, custom-tailoring services to fulfill climate disclosure requirements easily and accurately.
Meet with a sustainability specialist to learn more about RyeStrategy solutions.
