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 different other issues concerning data security, labor relations, product safety, and talent acquisition. ESG has to do more than a company committing to sustainability, and can be thought of as a way to manage risk. Company executives need to understand ESG principles and apply them in running their organizations. Discover how you can benefit from gaining ESG awareness in running your company in this article.
Investors are becoming concerned about ESG issues in the current day. You need to convince modern investors that your company is a good thing in general for the world. You are likely to get a premium for each share you sell if you can prove your ESG credentials in the marketplace. Investors want proof that you are taking steps to protect the environment, keep your customer data safe, and take good care of your employees.
You can get capital cheaply when you have high ESG scores. One might believe that complying with ESG is costly and will undermine the company’s profitability. However, it does not always work like this and the most progressive companies will usually get low borrowing costs.
You will manage to keep losses at bay by applying ESG principles in running your company. Failing on ESG matters makes losses inevitable. Ensure that you avoid losses by incorporating ESG from the word go so that you can prevent ESG related scandals.
Your company assets can be negatively affected by climate change. Corporate asset managers agree that the threat to company assets is present as long as catastrophic climate change keeps happening. You should protect your company assets against the effects of atmospheric temperature rises, habitat destruction, and increasing sea levels.
You can add to your human capital by incorporating ESG principles. ESG proposes that when you invest in people and treat them well, it will make higher returns in your organization. Data collected shows that this is true, and you can achieve better performance in your company through ESG.
High ESG scores can help you prevent bankruptcy for your firm. Reports show that companies with poor scores on ESG are more likely to go bankrupt compared to those with high ESG scores. Out of the companies that file bankruptcy, most have had significant failures on social policy, governance, or environmental issues.