The concept of sustainability has become a trending topic over the last few years. The world has become increasingly aware of the impact human activities have on the environment. Today, organizations have taken an active role in the responsibility of driving green change by adopting operations and practices that are environmentally friendly. One of the key tools that organizations can use to attain sustainability goals is the Environmental, Social, and Governance (ESG) principles.
ESG principles are guidelines that organizations can follow to ensure that they are operating in an environmentally and socially responsible manner.
The ‘E’ in ESG stands for Environmental referring to the organization's impact on the environment such as carbon emissions, water usage, waste management, electricity source (renewable or non-renewable), energy consumption, etc.
The ‘S’ stands for Social referring to the company's impact on society, including factors such as labor practices, human rights, community engagement, and contribution to the community.
The ‘G’ stands for Governance referring to the way a company is run and how it is controlled, including issues such as executive pay, anti-corruption policies, and board diversity.
"ESG considerations should be part of every company's core strategy, not just a bolt-on afterthought." - Emma Walmsley, CEO of GlaxoSmithKline
Here are some of the ESG guidelines that organizations have adopted to follow a successful ESG path:
● Environmental Stewardship: Environmental stewardship is the adoption of practices that promote responsible use and protection of the natural environment through active participation in conservation efforts and sustainable practices. These include but are not limited to, using recycled or reclaimed wood for furniture and furnishings in the offices, reducing greenhouse gas emissions by using alternative sources of energy production, conserving natural resources, and minimizing waste.
● Social Responsibility: Social responsibility is the ethical framework that organizations follow to promote diversity, equality, and inclusiveness in the workplace, contribute to the communities in which they operate, and respect human rights. One of the key ways to do this is to foster a positive work environment that provides fair opportunities and supports employee health and well-being. The importance of workspaces that provide holistically in allowing employees to be their most productive selves while allowing them to be their most healthy selves is one of the cornerstones of WELL certification.
Implementing ESG guidelines can lead to some other long-term benefits which include:
● Attracting and retaining top talent: Organizations that are committed to ESG can attract and retain top talent by positioning themselves as socially responsible employers. Millennials and Gen Z want to work with the possibility to create a positive impact, and companies with practices in place that promote ESG are more aligned with the next-gen workforce.
● Increased efficiency and cost savings: Organizations that prioritize ESG can benefit from increased efficiency and cost savings through measures such as reducing energy consumption and implementing sustainable sourcing practices. The use of technology like IoT-based sensors can aid in the goal to be more efficient.
● Long-term viability: Organizations that prioritize ESG can be better equipped to address long-term challenges like climate change and social inequality, which ensures their long-term viability.
● Positive reputation: Having strong ESG practices can help an organization gain a better reputation among customers, investors, and other stakeholders. As the old saying goes “The best marketing is word-of-mouth marketing.”
● Future-ready: Organizations that have adopted ESG practices are ready for the future. With a lower risk of failing compliances, higher trust from investors and customers, and more adept at adopting market changes, the companies with core ESG practices will continue rising higher.
Larry Fink, CEO of BlackRock, the world’s largest asset management and investment company says "Businesses that ignore ESG issues will be less successful in the long term."
As the world moves forward to a more sustainable future, businesses with better sustainable practices and a focus on ESG will be playing a huge role in adding to the global goal of a better world.
Richard Branson, Founder of Virgin Group put it beautifully - "The future of business is about creating a better world for everyone."