Environmental, social and governance (ESG) concerns are inextricably linked with your business, as they are with every business. As a result, it is a given that a solid ESG proposition can add value to your business.
Getting ahead of infractions before they happen, or guaranteeing transparency and engagement with regulators instead of formally presenting a report and letting the outcomes speak for themselves, are examples of how to excel in governance. Proactively thinking about and acting on ESG has recently become very important. This can be done with the right ESG initiatives management tool.
The advantages of adopting an ESG initiatives management tool include:
Companies have the potential to reach new markets and develop within existing ones with a solid ESG proposition. When governments have faith in corporate actors, they are more inclined to grant them access, permissions and licenses that open up new growth opportunities.
Gaining competitive edge
Companies that engage in social-engagement activities are sometimes seen as helpful by the public and social stakeholders have an easier time extracting those resources, with less planning and operational delays. These businesses are valued at significantly greater levels than competitors with weaker social capital.
Consumer preference can also be influenced by ESG and according to McKinsey, buyers are willing to part with their money to “go green.”
Increase in employee productivity
A compelling ESG initiatives management tool proposition may help businesses attract and retain top talent, increase employee motivation by fostering a sense of purpose, and boost overall productivity. Shareholder returns are then favourably connected with employee happiness, as employees feel more aligned with a responsible company’s vision.
According to McKinsey, recent research has also found that having a positive social influence is linked to increased job satisfaction, and field experiments have demonstrated that when companies “give back,” employees respond positively.
A sense of greater purpose can inspire your staff to perform better, while a weaker ESG proposition can push productivity down, and lead to strikes, worker slowdowns, and other labour actions within your company.
An ESG initiatives management tool can also reduce costs for businesses substantially. An ESG initiatives management tool helps companies tackle rising operating expenses like raw-material costs, electricity bills, cross-fertilisation and the true cost of water or carbon, which according to a McKinsey study can reduce operating profitability by as much as 60%.
The reputation of your brand is now more crucial than ever. Maintaining a positive brand reputation enhances consumer loyalty, boosts market confidence, and positions you as a market leader. You may simply boost your reputation by using effective brand reputation management strategies and ESG reporting is essentially another communication channel, a very important one, at that.
ESG is one of the many ways that companies can communicate and strengthen their brand. Consider your brand and how you want to be viewed as you develop a vision and strategic objectives for what you want to achieve with an ESG report.
Therefore, the ESG initiatives management tool is an essential engagement tool to help you increase brand reputation and equity.
Investment and asset optimisation
A strong ESG initiatives management tool can boost investment returns by earmarking capital to more favourable and more viable opportunities. It can also assist businesses in avoiding stranded investments that may not pay off in the long run due to long-term environmental concerns.
When it comes to ESG, keep in mind that doing nothing usually results in an eroding line, not a straight line. While the costs of updating your operations may be significant, waiting it out can be the most costly alternative of all.
According to McKinsey, investment and asset optimisation seem to include, for example transforming failing parking garages into higher-demand use spaces like apartments or daycare centres, especially in reviving communities. This kind of investment and again “give back” act won’t hurt your brand’s image either.
Although these points for adopting an ESG initiatives management tool point towards value generation and tie into hard data, consider the softer aspect at work here too. What is important are your employees, your reputation, your brand, and your investment in your community.