Environmental, social and governance (ESG) are three dimensions of sustainability that organisations need to embed into their operations and report on. Whilst not currently mandatory for some businesses to adopt an ESG policy, the government have announced their plans to do so in the future. So why should you care about it now?
Environmental
The environmental impact that your business creates, even as a by-product of your core products or services is becoming increasingly more important to monitor. You should consider:
- Your companies contribution towards climate change and what steps you are taking to address this
- Action your company is actively taking to reduce carbon emissions
- Reporting on your contribution to pollution and what you are doing to reduce this
- Whether you are addressing harmful environmental issues in your supply chain
Social
Often confused with ‘sustainability’, ESG brings a social element to a company’s performance. Instead of thinking about the wider effects of the work you do, you should ask yourself:
‘How do we affect our employees, our customers, our suppliers and our local community?”
This usually starts with your own employees’ wellbeing and engagement and those who are directly affected by their association with your business. Tom Morrison, of Stone King LLP notes: “Like all businesses we are evolving our understanding of how best to support wellbeing and we have moved from a series of (important) initiatives to a more cohesive strategic approach, treating our physical and mental wellbeing with the same seriousness as we do in other aspects of our business.”
All businesses should create greater value for their products and services which in turn can improve the quality of life for others within the community.
Governance
Reporting on governance predominantly covers factors that contribute to the policies and procedures by which an organisation is run. This includes decisions that are made, compliance with law and meeting the needs of stakeholders.
A good way to review the governance within your business is to assess your demonstrable organisational purpose and values that are embedded within your company. Ask yourself what diversity your board represents, who is accountable and who is responsible for stakeholder engagement?
Why does this matter?
There are a number of reasons why considering your organisation’s ESG policy now is important. Aside from the potential monetary benefits, there is a direct correlation between the engagement of existing people and the attraction of future talent. There is no doubt that people want to work for forward-thinking and inspiring companies that care beyond profit.
The companies that set themselves apart and create the changes that are needed will fast become the leaders in their field of tomorrow.
