ESG is for Everyone: 6 Reasons You Should Apply an ESG Framework
Many are under the guise that ESG is only relevant for big businesses, however articulating an ESG policy is just as valuable for SMEs and startups, and acts as an alternative approach when injecting an impact agenda.
Amidst pandemic recovery, inflation, climate change, widened economic gaps, social injustices and increased cyber threats, attention has heightened and many have been educated on the challenges occurring globally, keen to play their part. As a result, 60% of startups now use ESG strategies alongside a huge push from the investor community towards conscious investing, seeing 89% of investors considering ESG issues as part of their investment strategy in 2022.
Below are 6 benefits of implementing an ESG strategy:
Benefit 1: Increased investments
As mentioned, ESG reporting is a key path to attracting and retaining investors. For investors, aligning themselves with sustainable business practices allows them to be seen as addressing public concerns by providing ‘aid’ through a less risky portfolio. Due to the climate urgency, traditional investments in coal, oil and gas may become less viable, wooing in the substitution of ESG.
Benefit 2: Revenue generation
An ESG policy isn’t only attractive to investors, it appeals to consumers too. More and more communities across the world are choosing to spend their money consciously. It’s also worth noting that this is not just a ‘trend’, people genuinely care where their money is going, it’s a mass-scale cultural shift. Particularly post-pandemic, people want to know who is doing what for the global ‘good’ agenda.
Benefit 3: Cost reduction
With implementing conscious consumption as a pillar of your business, you’re more likely to analyse and evaluate your operational outputs and detect where you can shift to a more green approach. Naturally, this will have a cost-positive effect on your business. For example, becoming more energy efficient will lead to a contraction in bills, or going paperless will reduce spending.
Benefit 4: Building top talent
Just as consumers are seeking ‘for good’ businesses to buy from, those same consumers are translating this message to their careers. New standards have been set by job seekers everywhere who are keen to be part of a conscious culture in their workplace, and as we know, a satisfied and happy team is a productive and driven team.
Benefit 5: Reputation boost
Clear and true reporting of your company’s ESG displays a powerful message of your commitment to ethical and sustainable practices. Through transparency, you build trust and through trust you build loyalty. By attracting the best partners, investors, and consumers to your business, you position your company as a leader amongst your peers.
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Not jumping on the ESG trend now may seem fairly shortsighted, as if the industry trajectory has any truth, it’s on its way to being an industry standard. As a startup, it’s a lot easier to impose an ESG strategy as you’re still designing and testing your business. For established companies, it can be slightly more intricate to examine and dissect years of business. However, taking advantage of this opportunity to dig deep may even benefit your company’s overall strategy and performance. Make sure to stay ahead of the curve!
Useful Resources:
-Global Reporting Initiative is a free tool that helps company’s set ESG standards and guidelines.
