What’s Your Business’ ESG Approach?
The last several years have been rife with social tension. From socioeconomic struggles to the climate crisis, cries for change and stewardship are getting louder by the day. More than ever, consumers are looking to domestic corporations to drive change, and they’re embracing those who take such initiative and shunning those who fail to meet their expectations. In this environment, a lot depends on a company’s ESG approach.
ESG stands for environmental, social, and governance. It’s a set of standards for evaluating a company’s commitment to making a positive impact beyond its bottom line. Organizations with a clear, well-defined ESG policy are prepared to act within the bounds of increasingly influential public perception.
What is ESG all about?
Companies all over the world are using ESG plans to improve both image and operations, including industry giants like JPMorgan Chase and Goldman Sachs. By applying ESG standards, a company can improve its reputation, build better relationships, and transform its operations for a better future. Environmental, social, and governance criteria play important roles in the development of responsible company practices and procedures.
- Environmental. This standard considers the impact a company has on the environment. Considerations include a company’s waste, conservation of natural resources, and pollution production. What is your company doing to reduce waste and improve conservation?
- Social. This standard focuses on a company’s relationship with its employees, customers, community, suppliers, and other businesses. Companies applying social criteria may donate a percentage of profits to the local community, incorporate DEI measures, support LGBTQ+ rights, and/or work with ethical supply chains. The social standard also focuses on providing a safe working environment and paying fair wages.
- Governance. This standard focuses on a company’s leadership and how it handles shareholder rights and any other working relationship. Responsible governance shows stakeholders they have a say in important company issues and helps collaborators feel like equal partners in a joint venture.
A standard for responsible operations
Implementing an ESG plan offers an excellent opportunity for company growth. A strong ESG plan offers significant benefits in return for what is often a minimal investment. ESG plans tie businesses to positive initiatives affecting worker safety and opportunity, environmental responsibility, public opinion, and profits — all of which ultimately drive success.
Employee morale, environmental friendliness, and a good reputation are marks of a successful business. Companies with standing ESG plans should ensure they’re up to date and incorporated into broader operations. While ESG initiatives have benefits on the surface, if their effects don’t extend down to the company’s roots, consumers will recognize them as a PR pretense.
How to think about ESG now — and for the future
Business is more than creating and selling a product. It’s also about developing strong relationships with customers, suppliers, investors, and the community. Companies seeking to incorporate an ESG plan must consider both costs and potential profits. Can your company afford to allocate funds to charitable donations? What environmentally conscious changes would benefit company operations? How can you retool your organization’s core values to create benefits that ripple outward?
When developing an ESG plan, companies must define what’s important to their business and find ways to embody those ideals.
A chance to be a better business
Whether its reducing expenses or improving production efficiency, manufacturers are always seeking ways to improve their business. Today, being a better business means establishing your identity and values. If you don’t have an ESG plan in place, now is the time to create one, and if you already have one, it’s time to fully embrace it. What your company stands for matters just as much as the products or services you offer.