Over the past months, our lives have changed drastically. One of the themes that has been raised throughout the period of the pandemic is conscious consumerism. People are becoming more conscious of their buying habits and seeking alternatives that are not detrimental to the environment. In view that this is the only planet we have, many argue that a reactive approach was adopted for climate change and environmental damage. In view of these new challenges, companies are adopting Environmental, Social and Governance (ESG) criteria for the way that they operate.
Several companies have taken tangible action in this regard, with net-zero and carbon neutrality commitments. Businesses are making pledges to reduce greenhouse gases and undertaking significant investments to combat climate change. One example is that certain companies are producing meat, dairy and fresh products without killing animals. These products are growing in popularity as customers are becoming more environmentally conscious.
In view of the growing priority in safeguarding our only habitable planet, adopting ESG measures has never been more important for businesses of all sizes. ESG allows businesses to thrive in the present and sustain themselves for the future. It has gained higher prominence amongst investors as well. Stakeholders see it as a way to have businesses safeguarded from future risks.
The Environmental aspect of ESG looks at several matters including the impacts surrounding carbon footprint and water waste management amongst many others. The Social criteria delve into how businesses interact with the communities in which they operate. This aspect is also related to the internal policies of companies and how these impact employees, diversity and inclusivity, amongst many others.
Governance goes into internal processes and policies that influence decision making and how these correspond with ethical and legal parameters. This criterion goes into the compliance backbone of a business and the efforts undertaken to ensure transparency and accountability.
When looked at from a business perspective, ESG brings several long-term benefits such as fostering a sense of trust amongst consumers, reducing costs and attracting new recruits. The notion of ESG brings about a certain degree of ownership and accountability, where businesses play a key role in safeguarding our ecosystems, with governments not being the sole entities responsible.
The pandemic has taught us a lot about navigating through a crisis and firefighting. It has taught us the importance of a proactive approach, to take concrete action before crisis hits and ensure adequate preparation. We may still be in time to avoid other disasters, which can impact livelihoods and economies, underscoring why ESG is an important contributor and should be established as an essential pillar in business.
