4 Reasons to Focus on ESG
Environmental, Social, and Governance (ESG) is increasingly gaining traction. Due to climate change and environmental concerns, social justice movements, and pressure from investors, ESG has become a focus of companies from many industries.
What is ESG?
Before discussing why companies should focus on ESG, let’s break it down to the basics and understand what ESG is.
ESG stands for Environmental, Social, and Governance. The Environment aspect of ESG looks at the impact of any business on the environment, including its carbon footprint, resource consumption, waste discharge, and other business activities that impact the environment.
On the other hand, the Social element refers to how an organisation interacts and impacts the surrounding communities where it operates. This also includes the internal policies related to labour, inclusion, and diversity. Finally, Governance refers to the internal practices and policies that result in sound decision-making and legal compliance.
Why is ESG Important to Your Organisation?
Developing and implementing an ESG strategy can bring both financial and reputational benefits. Here are four reasons to adopt an ESG framework:
- Contributes to top-line growth
Businesses with a robust ESG strategy can easily enter new markets and expand their operations. Governments facilitate access by giving out licences and issuing permissions, and they favour those with a strong ESG strategy to contribute to the fight against climate change and other social issues.
- Leads to higher cost reduction
Companies that employ a more sustainable approach to production tend to be more efficient and can cut down their costs. For example, Nestle announced a US$2.1 billion investment by 2025 to shift from virgin plastic packaging to recycled plastics and other sustainable forms of packaging. This will not only reduce costs and carbon footprint, but also help the company comply in different geographies where there are stricter laws on the use of plastic packaging.According to asset management firm Arabesque and the University of Oxford’s review of academic literature on sustainability and corporate performance, 90% of 200 studies analysed concluded that good ESG standards lower the cost of capital, and 88% showed that ESG strategies result in better operational performance.
- Regulatory compliance
Regardless of the industry, businesses are subjected to some form of regulations. Those with solid ESG measures attract less scrutiny from regulators and enjoy greater freedoms to operate. There is also less pressure from climate change activists and employee unions.
- Attract talent
In a 2016 study by Cone Communications on Millennial Employee Engagement, 64% of millennials consider a company’s environmental and social commitments when choosing where to work. By having a clear sustainability plan, organisations can attract better talent and bring a sense of pride among staff.
How Spray Grass Australia Can Help With ESG
At Spray Grass Australia, we can help with the environmental aspect of your ESG strategy through our innovative environmental solutions. Our scientifically-backed revegetation, erosion control, dust suppression, and rehabilitation solutions are designed to help companies operating in the mining, energy, civil & infrastructure, rail, and defence industries remain compliant with government regulations and minimise their operations’ environmental and social impacts.
Let us be part of your ESG strategy and strengthen your brand reputation as a market leader in environmental compliance. By taking a proactive approach to ESG, we can also help cushion the disruptive impact of future mandates on your organisation.