ESG – what is it?

Environmental, social and governance (ESG) refers to an organization’s business practices and performance on various sustainability and ethical issues. It is often used by stakeholders to holistically measure and assess an organizations sustainability efforts. It is easily one of the largest areas for financial investment and those investors want to know transparently, what contribution your organization is making.

BlackRock has reported “a tectonic shift of capital”, with sustainable investments reaching $4 trillion

Blackrock.com

An ESG framework demonstrates how you have integrated sustainability and ethics into your organization business practices, providing a way to measure and report business risks and opportunities in those areas.

Notionally, ESG can be defined as:

This all seems like a good idea but why does it matter to my organization?

Companies with ESG programs communicate their potential to support their communities, reduce harmful impacts on the environment thereby enhancing their brand image and attractiveness. Socially responsible companies with a strong, public ESG commitment:

• Cultivate positive brand recognition increasing loyalty and attractiveness to investors

• Save or make money from operating efficiencies that are ESG focused

• Attract top-tier employees by aligning with personal values and purpose

• Enhance the firms reputation to local/global community, customers and employees

• Attracts investment dollars from ESG investors – BlackRock has reported “a tectonic shift of capital”, with sustainable investments reaching $4 trillion

• Protect your future by starting now, in Europe legislation is already in place regarding ESG, and in the USA, the SEC has a climate disclosure proposal which will likely become law.

These elements are among the keys to achieving increased profitability and long-term financial success from ESG, while demonstrating an ethical and sustainable approach¹.

The World Economic Forum has described some high levels areas of ESG, which can be leveraged:

The key to this, is to get started now. Please reach out to Glen Oak Consulting for support.

_{¹ Elements of this article have been drawn from various research and include: Investopedia, Berkeley Partnership}