Environmental, social, and governance (ESG) concerns are prevalent in every business on the planet. Therefore, it makes sense for a business to include these factors in their day to day decision making processes.

There are many ways in which having an ESG proposition can benefit a company. These benefits go beyond aligning the company’s values with the personal beliefs and values of owners or stakeholders. The benefits of ESG impact the bottom line of the company.

Companies that implement sustainable and socially responsible practices have a greater chance of thriving in the long term. This article discusses how companies can benefit from implementing ESG and how it impacts their bottom line.

Encironmental, Social, and Governance Can Help Your Company Thrive | Gregory Voetsch

Environmental, social, and governance (ESG) concerns have a deep interlink with the success of every business. It, therefore, makes sense to incorporate these factors in the day-to-day running of your company. A strong ESG can create tremendous value for your business in several ways.

1. It will help to open your business up to new opportunities.

Companies with a strong ESG proposition can tap into new markets that they wouldn’t have been able to. It can also help them to expand in their existing market. It is possible as governing authorities trust these companies more readily than those that don’t apply similar values.

ESG is also a significant advantage for companies when it comes to consumer preferences. Modern consumers are more informed about social and environmental issues. A recent survey showed that more than 70 percent of consumers in different industries, including electronics, packaging, and automotive industries were willing to pay an additional 5 percent for products considered sustainable or ‘green’ if they met the same standard as their non-sustainable counterparts.

2. Your company can save money.

ESG can help to reduce your company’s costs significantly. Being more conscious of resource use and using resources with greater efficiency will mean a great cost reduction in your operations.
However, the benefits of ESG don’t stop with cost savings. A study by McKinsey revealed that there is a correlation between increased financial performance and resource efficiency. Data from several companies shows that apply ESG has seen their operating profits grow by as much as 60 percent. Gregory Veotsch

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3. It will reduce legal and regulatory interventions.

A strong ESG will eventually lead to an easing of regulatory pressure for your company. ESG helps to reduce risks to companies of adverse legal action from the government. It also helps to encourage government support.

With a strong ESG, your company is also less likely to face legal action by consumers, employees, and other stakeholders.

4. Your company will experience increased productivity.

Your company will be better able to attract and retain quality employees. You will be able to create a work environment that motivates employees and instills a sense of purpose in them. It helps to increase productivity. Gregory Veotsch

Improved employee retention has a significant impact on shareholder returns. There is a positive correlation between employee satisfaction and shareholder returns. Employees with a sense of connection to their companies perform better, and the performance of the employees impacts the beneficiaries of their work, i.e., shareholders. Shareholders are, therefore, more willing to invest in a company in which they have confidence.

5. It will optimize your company’s investments and assets.

Your company can enhance your returns by allocating capital to more promising sustainable opportunities such as waste reduction or renewable energy. Your company can avoid having its capital tied in investments that may never pay off.

The takeaway

There is a lot that companies can benefit from by having a strong ESG proposition instead of going with the do-nothing approach. Companies that take ESG seriously see significant growth in their bottom line. If you are the leader of an organization, seeking out new ESG opportunities should be one of your top priorities in your efforts to nudge your company in a profitable direction. Companies that go down this route have a great chance of thriving in the long term.

©2020 - gregory voetsch