What feels like another buzzword, ESG is becoming more and more prominent in our way of doing business.
Not sure what it stands for? Below we have outlined the 3 main topics that are covered within the ESG.
E – Environment
How a business performs within our natural environment, focusing on:
- waste and pollution
- resource depletion
- greenhouse gas emission
- deforestation
- climate change
S – Social
How the company treats people both employees, contractors, stakeholders and customers as it concentrates on:
- employee relations & diversity
- working conditions, including child labour and slavery
- local communities; seeks explicitly to fund projects or institutions that will serve poor and underserved communities globally
- health and safety
- conflict
G – Governance
This reviews how a business does business with its policies and overall values:
- tax strategy
- executive remuneration
- donations and political lobbying
- corruption and bribery
- board diversity and structure
Long gone are the days that a business can just donate and be done with it. Nowadays employees and customers alike demand that businesses be transparent and show commitment to helping our planet Earth. By using the ESG measure, employees, customers and investors can review a business’s rating and demand change or support a business that is working towards a more sustainable model.
What does an ESG score mean?
AAA or AA
Are companies that are excelling at all levels of ESG within their business. They are actively looking at opportunities and risk within the businesses and proactively making change.
A or BBB or BB
Are companies that are excelling in a single area and poor at others or are average across the board. These companies are not as proactive as the AAA or AA group of businesses.
B or CCC
Are companies that are not managing ESG within their business. They are reactive to change which means they may be slow to take up new opportunities.
What can your business do today?
If you are thinking to adopt ESG policies for your business-
- Review your current policies
- Conduct an assessment of your current policies – look at ways you can improve by reviewing the outline above.
- Learn about different ESG standards, frameworks and policies
- Allocate resources and define your strategies with accountability measures
- Engage with other businesses, associations, regulators and stakeholders to build collaborations and progress towards greater impact and shaping better ESG practices
Together we can all make important change!
