In recent years, sustainability quickly climbed its way to the very top of corporate priorities. We can’t say we are very surprised by this development. The present-day society is making big steps in the sustainable direction, and the business world has no choice but to tag along. Also, sustainable companies are viable companies, and in a business arena as competitive as it is now, any semblance of maneuvering space is all but necessary.
Where to start? Well, the ESG (environmental, social, and governance) standards that clearly outline specific criteria used to assess companies’ commitment to sustainable operations do sound like basic guidelines we can use to steer our effort.
Let’s see how these standards can be used to ensure the long-term sustainability of your company.
Ensuring adequate investment funds
Let us start by reminding ourselves that the main reason for developing ESG standards was to help the investors to screen potential investments and help them discern which companies are abiding by the generally accepted sustainable practices. Implementing these standards in your company will help it get investments of these sorts and also open the doors for lucrative government incentives aimed at encouraging such practices. These funds can be used to promote subsequent sustainable practices.
Outlining clear sustainability goals and strategies
When you stop for a moment to think about it, sustainability is a very broad and elusive term. We all know sustainability is good and all companies should strive to achieve it, but without some tangible frame of reference, we don’t know how these efforts should be seen through. Using the ESG standards effectively moves this issue off the table. Since this set of rules and expectations sets up a very clear set of criteria, companies can use this powerful resource to set up sustainability goals, strategies, as well as KPIs.
Laying the foundation for business cooperation
Improving the sustainability of one company is not a feat that can be achieved in one run or, for that matter, by one company left to its own resources. In most cases, you will use professional business consulting or some other type of third-party services. How then ESG strategies make this issue easier? Well, we are once again talking about the unified frame of reference. Essentially, ESG standards give all parties involved a sort of lingua franca they can use to make sure they are on the same page.
Keeping it simple and digestible
The ESG standards, and all other sustainability practices for that matter, are not used only to refine the internal practices of one organization. These initiatives can also be used as a powerful marketing resource. Keeping that in mind, we would like to once again point out that the ideas of sustainability tend to be very abstract and hard to translate to a general audience. Fortunately, since they are used as a quick pitch to investors, ESG standards make these abstract ideas as digestible as they possibly get.
Encouraging critical and strategic thinking
Some people might say that being simple and streamlined as they are, basic ESG guidelines don’t provide enough material for the development of long-term sustainability initiatives. That’s alright since the basic idea behind this set of criteria was never to provide robust sustainability strategies. But, even with things as they are, ESG standards do a great job of encouraging critical and strategic thinking and helping companies to come up with unique solutions for this problem of their own.
Improving the business flexibility
The present-day business arena is very fast-paced, competitive, and crowded. In a situation like that implementing any kind of structural changes, sustainability reforms included, requires a great deal of flexibility and nimbleness. These critical traits can be achieved only if your business operations are rooted in some simple lowest common denominator standards. The ESG criteria present exactly that – a clear set of standards that can easily serve as your strategic foundation moving in 2023 and beyond.
Last but not least we would like to point out the problem of greenwashing which essentially presents the mistake of performing aimless and non-productive sustainability reforms just for the sake of it or to be used for marketing purposes. Putting aside that they represent a giant waste of money, attempts like these have a very bad habit of backfiring once the general public sees through them. That is why ESG criteria present such a useful asset – using them puts your investments where they are needed the most.
We hope these seven examples gave you a general idea about just how important ESG strategies can be for ensuring the long-term and sustainable development of your organizations. As time goes by, sustainable business operations are quickly growing from a novelty to an absolute requirement. Using the ESG criteria as your main guiding principle will make sure that your company will be able to tap into this trend as easily and effectively as possible.