ESG: what is the impact on the sustainability of companies?
Posted: Thu Dec 26, 2024 3:17 am
If in the past companies were only evaluated by their productive and economic factors, nowadays there are other considerations and requirements to take into account, particularly in terms of sustainability, which plays a crucial role not only in consumer choice, but also in the expectations of partners and investors.
It is in this context that the concept of ESG comes into play , an acronym that has been gaining importance in assessing the sustainable role of companies .
What is ESG?
ESG, an acronym for " Environmental, Social and Governance " , is a set of indicators, divided into three distinct factors, which allows us to assess whether an organization is fulfilling its commitment to sustainable development in environmental, social and corporate governance issues that is currently expected of organizations.
These indicators arise in the context of the strategic objectives of the hong kong whatsapp number database Nations, more specifically, for the 2030 Agenda and the Sustainable Development Goals (SDGs), serving as criteria for evaluating the performance of companies and institutions in this area.
In this sense, ESG factors encompass all types of organizations, from large companies to SMEs and micro-enterprises, which is why they are now an essential point to take into account in the management of any company to meet the expectations of its stakeholders .
What are ESG factors?
As the acronym suggests, ESG factors are divided into three pillars: environmental, social and corporate governance.
Environment
Environmental indicators focus on activities linked to environmental policy and the organization's impact and respective management on the environment.
Among the environmental practices considered in this factor are:
environmental management systems;
environmental programs and environmental training and awareness;
waste management and reuse of raw materials or replacement with more ecological/less harmful materials;
reduction of energy intensity and greenhouse gas emissions;
water consumption management;
prevention of climate and biodiversity risks;
circular economy .
Social
Social indicators focus on relationships with employees, suppliers, customers and communities where the company operates.
Social impact actions assessed by ESG include:
hiring and human rights policies;
equal pay;
occupational health and safety systems;
workforce inclusion and diversity measures;
gender equality;
qualification of workers;
measures to reconcile personal and professional life;
connection to the community;
network and local partnerships.
Governance
The governance factor focuses on the way the company is managed by its management and directors, with an emphasis on their transparency and honesty.
Therefore, some of the governance actions from an ESG perspective are:
measures related to ethical values;
transparency and legal compliance;
anti-corruption policy;
wage policy;
codes of ethics and conduct;
gender diversity in management;
responsible purchasing policies;
codes for suppliers;
due diligence measures in supply chains;
risk management.
The importance of ESG in companies
The role of ESG factors is increasingly becoming more important in companies, for several reasons:
Investment attraction
For companies seeking capital, ESG factors are a must-have given the weight that potential investors give them. In particular, strong ESG performance is seen as a better long-term investment, as it translates into a more sustainable and future-proof company.
Reputation management
ESG has a direct impact on a company's reputation, with social and environmental awareness and transparency being two of the factors that have the greatest impact on the public perception of an organization. Therefore, companies that embrace ESG principles and take direct steps to implement measurable actions in this regard gain a better reputation not only with consumers, but also with investors, suppliers and other partners.
Social and environmental responsibility
In addition to the impact on the company's perception and appeal for investment, we cannot ignore their legitimate importance for the world we live in. More than just reputation management or transmitting trust, ESG factors are designed to have a real and direct impact on sustainability, so any company that adopts them is contributing to a social and environmental improvement that brings benefits to everyone, not just to the organization itself.
Advantages of ESG for companies
Increased stakeholder confidence
Greater transparency and social, environmental and anti-corruption initiatives translate into greater security for all parties involved, including not only the aforementioned greater trust on the part of consumers and investors, but also greater transparency for other stakeholders in the production process, such as employees and suppliers. These directly benefit from governance policies, such as better wage policies, equal opportunities and a more trusting relationship with suppliers.
Risk reduction
Socio-environmental issues are an important factor in risk analyses and investment decisions. ESG criteria help to offset this factor through environmental and social management criteria that ensure compliance with laws and avoid fines and sanctions, for example, with regard to working conditions and anti-corruption actions.
At the same time, as investors are increasingly paying attention to ESG criteria to assess a company's potential, organizations with better risk management in these attributes have a greater potential to attract investment.
Finally, greater security for employees themselves in the face of more transparent and fair management also implies greater operational security, in the sense that it prevents employee dissatisfaction that could lead to strikes, dismissals and other actions with a negative impact on the production process.
It is in this context that the concept of ESG comes into play , an acronym that has been gaining importance in assessing the sustainable role of companies .
What is ESG?
ESG, an acronym for " Environmental, Social and Governance " , is a set of indicators, divided into three distinct factors, which allows us to assess whether an organization is fulfilling its commitment to sustainable development in environmental, social and corporate governance issues that is currently expected of organizations.
These indicators arise in the context of the strategic objectives of the hong kong whatsapp number database Nations, more specifically, for the 2030 Agenda and the Sustainable Development Goals (SDGs), serving as criteria for evaluating the performance of companies and institutions in this area.
In this sense, ESG factors encompass all types of organizations, from large companies to SMEs and micro-enterprises, which is why they are now an essential point to take into account in the management of any company to meet the expectations of its stakeholders .
What are ESG factors?
As the acronym suggests, ESG factors are divided into three pillars: environmental, social and corporate governance.
Environment
Environmental indicators focus on activities linked to environmental policy and the organization's impact and respective management on the environment.
Among the environmental practices considered in this factor are:
environmental management systems;
environmental programs and environmental training and awareness;
waste management and reuse of raw materials or replacement with more ecological/less harmful materials;
reduction of energy intensity and greenhouse gas emissions;
water consumption management;
prevention of climate and biodiversity risks;
circular economy .
Social
Social indicators focus on relationships with employees, suppliers, customers and communities where the company operates.
Social impact actions assessed by ESG include:
hiring and human rights policies;
equal pay;
occupational health and safety systems;
workforce inclusion and diversity measures;
gender equality;
qualification of workers;
measures to reconcile personal and professional life;
connection to the community;
network and local partnerships.
Governance
The governance factor focuses on the way the company is managed by its management and directors, with an emphasis on their transparency and honesty.
Therefore, some of the governance actions from an ESG perspective are:
measures related to ethical values;
transparency and legal compliance;
anti-corruption policy;
wage policy;
codes of ethics and conduct;
gender diversity in management;
responsible purchasing policies;
codes for suppliers;
due diligence measures in supply chains;
risk management.
The importance of ESG in companies
The role of ESG factors is increasingly becoming more important in companies, for several reasons:
Investment attraction
For companies seeking capital, ESG factors are a must-have given the weight that potential investors give them. In particular, strong ESG performance is seen as a better long-term investment, as it translates into a more sustainable and future-proof company.
Reputation management
ESG has a direct impact on a company's reputation, with social and environmental awareness and transparency being two of the factors that have the greatest impact on the public perception of an organization. Therefore, companies that embrace ESG principles and take direct steps to implement measurable actions in this regard gain a better reputation not only with consumers, but also with investors, suppliers and other partners.
Social and environmental responsibility
In addition to the impact on the company's perception and appeal for investment, we cannot ignore their legitimate importance for the world we live in. More than just reputation management or transmitting trust, ESG factors are designed to have a real and direct impact on sustainability, so any company that adopts them is contributing to a social and environmental improvement that brings benefits to everyone, not just to the organization itself.
Advantages of ESG for companies
Increased stakeholder confidence
Greater transparency and social, environmental and anti-corruption initiatives translate into greater security for all parties involved, including not only the aforementioned greater trust on the part of consumers and investors, but also greater transparency for other stakeholders in the production process, such as employees and suppliers. These directly benefit from governance policies, such as better wage policies, equal opportunities and a more trusting relationship with suppliers.
Risk reduction
Socio-environmental issues are an important factor in risk analyses and investment decisions. ESG criteria help to offset this factor through environmental and social management criteria that ensure compliance with laws and avoid fines and sanctions, for example, with regard to working conditions and anti-corruption actions.
At the same time, as investors are increasingly paying attention to ESG criteria to assess a company's potential, organizations with better risk management in these attributes have a greater potential to attract investment.
Finally, greater security for employees themselves in the face of more transparent and fair management also implies greater operational security, in the sense that it prevents employee dissatisfaction that could lead to strikes, dismissals and other actions with a negative impact on the production process.