Businesses today have started to look beyond ROI & stakeholder satisfaction for long-term sustainability and growth. The increasing focus on paying back to the external factors supporting their development has led to many ESG (Environmental, Social, and Governance) initiatives. These are a major influencing factor for enterprises to ensure sustainability in a fast-paced business world and demonstrate their commitment to responsible business practices.
ESG gained significant traction in recent years, and investors are optimistic towards enterprises that uphold ESG values & actively contribute.
EY’s ESG survey report 2022 says that 78% of investors expect companies to invest in ESG issues related to their business, even though there is a setback in profit.
According to the NAVEX survey 2023, almost two-thirds of privately-owned organizations already have ESG initiatives. Now above statistic can be considered a nudge for businesses yet to embrace ESG practices.
If you are looking to build a culture of sustainability and establish or improve your ESG initiatives, here are some key areas that are gaining attention and deliver better impact.
Why ESG is important?
If we start looking into why companies should care about ESG, we can realize factors like Environmental shift, widening social interests and increasing moral awareness are the primary reasons. And these significant factors can be branched into many aspects that necessitate companies to become Pro ESG for long-term sustainability & growth.
The growing importance of climate change:
As the impacts of climate change become more severe, enterprises are likely to face increasing pressure to reduce their carbon footprints and demonstrate a commitment to sustainable and environment-friendly business practices. This could include investing in renewable energy, reducing emissions from operations, and incorporating climate risk mitigation into strategic planning.
Implementing green supply chain management:
This involves scouting suppliers with shared values on environmental sustainability practices. Making environmentally conscious initiatives across every stage of the supply chain would improve the Green Quotient of marketable products & services of the organisation. SRM Tech as a global digital and product engineering services provider is a conscious partner for enterprises. We are pursuing both our philanthropic and business commitments towards ESG initiatives.
CSR initiatives:
Corporate social responsibility refers to voluntary actions & investments contributing to the social and environmental wellbeing of the communities in which businesses operate. CSR initiatives can include philanthropy, sponsorship, and environmental upliftment activities.
Greater emphasis on social issues:
While environmental considerations have historically been a significant focus of ESG, there is increasing recognition of the importance of social issues such as diversity, equity, inclusion, employee well-being, and community engagement and deploying dedicated policies on DEI drive and collaborate both internally & externally to address these issues at a high level.
Healthy labour practices:
Enterprises must ensure their labour practices are fair and ethical. This includes minimum wage, overtime pay, and working conditions. By providing necessary amenities, businesses can create a better employer brand that improves overall morale and gains employee retention.
Rise in regulatory focus:
Governments worldwide are taking steps to regulate & monitor ESG progress, requiring companies to disclose more information about their ESG practices and potentially imposing penalties for non-compliance. It is essential for companies to incorporate ESG considerations into their business practices to comply with regulatory requirements and gain over potential opportunities.
Ethical Standards:
Establishing an ethical code of conduct & policies offers a structure to govern the behaviours of employees and management; this includes issues such as conflicts of interest, employee wellbeing, insider trading, and bribery. It cultivates a greater sense of responsibility & increased morality which ultimately sustains ethical business practices.
Culture and values:
The culture and values of their employees and customers should be considered by businesses. This includes factors such as language, religion, and beliefs. Enterprises that value cultural differences can build stronger relationships with their customers and employees and develop a human-centric brand.
Employee engagement:
ESG focussed companies could experience higher employee engagement and retention levels. Companies could inspire and instil the importance of ESG in employees as they are often more motivated to work for a company that prioritises social and environmental concerns.
Long-term sustainability:
Enterprises must consider the long-term sustainability of their operations. This means ensuring their business practices are not depleting natural resources or unfolding social or environmental problems. Enterprises must also ensure that their initiatives compound their financial sustainability to operate in the long run.
Increased Access to Capital:
Investors are increasingly looking at ESG metrics of businesses on which they are wiring investments. Enterprises with strong ESG performance are more likely to attract wider investment opportunities, easing them to embark on new, innovative initiatives that add more value to the business.
How can companies raise their ESG benchmarks?
Develop ESG Framework:
Companies should develop ESG frameworks & policies that outline their commitment to environmental, social, and governance principles. The framework should include specific goals, targets, and metrics for tracking progress and measuring success. They must streamline and revise the framework according to the dynamic external factors to derive much-needed positive outcomes.
Integrate ESG into Business Strategy:
Companies should integrate ESG considerations into their overall business strategy, decision-making processes, and day-to-day operations. By doing this, ESG initiatives will become an integral part of overall business outcomes, making companies continuously contribute to ESG upliftment & achieving a positive outlook in the market.
Create an ESG committee:
It is vital to create a cross-functional ESG committee to oversee the implementation of the company’s ESG policies and goals. This committee can include representatives from different departments & functionalities across the organisation so that multiple perspectives can be garnered, and ideas can be pondered to derive more impactful outcomes through ESG initiatives.
Improve Stakeholder Engagement:
Companies must realise that all the engagement among stakeholders, employees, customers, & partners is necessary to achieve ESG goals. To make them understand & emphasise ESG concerns, companies have to leverage consistent communications about initiatives & outcomes, conduct workshops for participation, and partner up with NGOs and independent ESG entities.
Continuous Improvement:
Companies should establish processes for monitoring and reporting on their ESG performance. They could start by collecting data, analysing implementation, auditing, and reporting on progress against established goals and targets. Based on insights, they can improve their ESG strategies and make investments accordingly. This also assists companies in setting new goals and targets, identifying best practices, and benchmarking against industry peers.
Technology Investments:
Identifying potential ESG gaps in business operations & eliminating them with appropriate application of technologies is crucial for brands to cope with ESG benchmarks. Companies should always be prepared to embrace technologies, validate options & make thoughtful investments in them to level up their ESG performance.
The volume of ESG-conscious companies is relatively increasing compared to numbers from the past few decades. But the fact is, in the current scenario with alarming environmental changes, diverse social phenomena & governance amendments globally – entities and individuals seem to have a natural, genuine intent to embrace ESG values into their ecosystem. At SRM Tech, all our stakeholders are working towards shaping our sustainability strategy and exploring how to align our processes and goals to future development.
As we look to redefine our corporate policies and deepen our sustainability commitments, we urge CIOs, business leaders and organization heads reading this to evaluate their ESG quotient and act on them to make this world a better place to live, cherish & achieve more incredible things.
