Why is ESG a top priority for businesses now?

 

Environmental, social, and governance (ESG) practices are slowly gaining attention as an essential criterion for HRM standards within any business or company. If you still haven’t developed a robust ESG strategy or model for your organization, here are specific, solid reasons to think about this immediately.

• Attracting Investment

Investors are slowly including ESG data within their screening process to get a fair understanding of the organizations in which they invest. It means that if your company has an excellent working ESG policy with a better level of engagement and a clear vision, you will get more investors interested in your business.

• Positive Impact on Operations

ESG appears to be more than a singular issue. Instead, it is a combined understanding of an organization’s operations, strength, leadership, and climatic response. In the post-COVID era, this overview of a specific company’s operations has become more popular. It ensures that you have an ESG strategy aligned with the investment process. It will boost long-term value creation and help you identify inefficiencies quickly.

• Mitigating Risks

Including an ESG framework within your operation and system can aid your organization’s long-term success by reducing environmental, social, and governance risks. Companies that often use an ESG lens to view their risk management and due diligence are often rewarded with reinvestments and ensure sustainable growth.

• Financial Performance

With a well-structured ESG agenda, your company can often expect significant improvement in the financial sector and downside protection, which appear crucial during an economic or social crisis.

• Market Expectations

A recent report suggests that 8 out of 10 global consumers expect CEOs to take charge of societal issues like pay parity, gender diversity, and carbon footprints. Further, a company with a strict ESG policy will quickly rise, meet consumer expectations, and rule the markets.

• Employee Engagement

A successful ESG practice often aids you in promoting environmental citizenship behavior and defining a straightforward company culture. With better ESG, employees have more opportunities to engage, volunteer, give back, and be accountable to their organization. In turn, it promotes overall work satisfaction.

• Attracting human capital

Good research indicates that around 72 percent of the global workforce will consist of Gen Z and Millennials by 2029. Out of 100 percent of resources, 40 percent are expected to criticize their employer’s action or inaction due to societal issues. As a result, better ESG practice becomes a criterion to consider before accepting one job over the other. This means the more current and up-to-date your ESG practices are, the better the workforce your company can attract.

In conclusion, your company must take ESG seriously to strengthen and secure client relationships. Also, it helps businesses attract investors, build customer loyalty, improve financial performance, make operations sustainable, and gain a competitive edge.