The concern for the environment, social, and governance is a real one in businesses today and has a lot to do with issues of the environment and climate. It also covers a range of other issues concerning talent acquisition, data security, product safety, and labor relations. ESG has to do more than a company committing to sustainability, and can be thought of as a way to manage risk. It is essential for company executives to understand ESG principles and channel them to improve the success of their organizations. Discover how you can benefit from gaining ESG awareness in running your company in this article.
Investors are now more concerned about ESG issues than they may have been before. You have to convince current investors that your company is by and large concerned about the good of the world if you want them to invest. You are likely to get a premium for each share you sell if you can prove your ESG credentials in the marketplace. Investors need the evidence that you are doing what you need to for the protection of your customers’ data, taking care of your employees, and protecting the environment.
You can get capital cheaply when you have high ESG scores. When you think about it, you might expect that incorporating ESG into running your operations will undermine your profitability because of the expenses involved. However, it does not always work like this and the most progressive companies will usually get low borrowing costs.
You can avoid significant losses by incorporating ESG principles in running your organization. Failing on ESG matters makes losses inevitable. Since ESG related scandals are a sure way to garner losses for your company, you can avoid them by getting yourself high ESG scores.
Your company assets can be negatively affected by climate change. Corporate asset managers are always concerned about the effect of catastrophic climate change on company assets. You should actively do something to protect your assets against different factors such as increased sea levels, increase in atmospheric temperature, and habitat destruction.
Applying ESG can help you improve your human capital. ESG proposes that when you invest in people and treat them well, it will make higher returns in your organization. Data collected confirms this proposition, and you can be sure to enhance your company performance this way.
You can avoid bankruptcy by having better ESG scores in your organization. Reports show that companies with poor scores on ESG are more likely to go bankrupt compared to those with high ESG scores. Most of the companies that file bankruptcy have had failures on their environmental, governance, and social policy years before filing.