More than 70% of top executives believe that ESG ought to be a priority.
The fact shouldn’t come as a surprise: Of course, execs want their business to be sustainable. But what should come as a surprise is that ESG creates value in more ways than you think. Most of us tend to equate ESG with running on clean energy. But there’s more to it.
By ensuring the happiness of its workforce, ESG-compliant enterprises are primed for higher productivity. By prioritizing employee welfare, they foster a feeling of community and purpose.
In this way, they boost the physical and mental health of their workforce, and hence the drive to work. ESG-compliant enterprises are hence primed for efficiency and productivity.
Improved risk management
Risk management ranks very high on investor priorities. No wonder ESG dominates investor portfolios.
Essentially, what ESG solutions provide is an assessment of the wide range of factors that affect an enterprise’s growth. Coupled with data analytics, we can determine those factors that may have a negative or positive impact. Once the factors are determined, an enterprise can readjust its strategy to double down on or counteract them.
In this way, enterprises always remain a step ahead. Investing in such an enterprise is far less risky compared to investing in a static enterprise, an enterprise that doesn’t keep up with the times.
It’s worth mentioning that by virtue of being better at managing risks, ESG-compliant enterprises are also more cost-effective, since taking fewer unnecessary risks leads to fewer unnecessary losses. They allocate their resources where they will be more productive; more bang for their buck.
A common negative factor? Changing customer preferences.
Customers are more aware of the consequences of their purchases than ever. And therefore, customers have become increasingly wary of buying products that contribute to environmental and social degradation.
That’s a big threat to enterprises that don’t make a change. To investors, they represent a risk compared to enterprises that incorporate ESG values in their strategy. These enterprises, instead, are celebrated by their customers, since their values are aligned, and will continue to if they continue to listen and change.
But besides violating environmental or human rights pacts, bribing or corruption violations, too, can shatter stakeholder confidence. By following ESG standards, enterprises reduce the risk of regulatory interventions, and therefore, public and stakeholder condemnation.
What more could an investor want?