Careful consideration and full transparency around ESG Risk, enhances the long-term value of your business.
ESG, (Environmental, Social and Governance) the framework used to assess your organisation’s business practices and performance on many sustainability and ethical issues, can crucially also provide a way to measure business risks and opportunities related to the aforementioned areas.
So, in essence, the risks that arise from getting it right from the start, whether that is through economic investment or choosing suppliers who mirror your own company ethos at the expense of maybe a long-term supplier who doesn’t, are more than always likely to be dwarfed by the benefits gained.
The linkage from ESG to value creation is a solid one and can be broken down into 5 main areas.
Top line growth in the shape of new markets or tapping deeper into existing markets in one benefit from following an ESG strategy.
Reducing costs in a sustainable fashion will ensure benefits for both your business and the environment, and leave you less vulnerable to outside influences, such as the current war in Ukraine, which is heavily linked to sharp increases in energy costs.
Thirdly, ESG strategies will reduce the risk of adverse government or regulatory pressure and therefore increase strategic freedom.
Employee productivity, that incorporates investing in good people, who are then invested in you, drawn and motivated by a common purpose, will in greater probability, give you a more focussed and driven workforce, and a more attractive proposition for customers and investors. The likelihood then is that any investment returns on the back of all of the above, will allow for more promising and sustainable opportunities to reinvest the capital to further grow your business.
