Adopting Leading ESG Practices can enhance Corporate Value. How?

 SGAnalytics_Blog_Adopting Leading ESG Practices can Enhance Corporate Value. How?

Published on Feb 08, 2023
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During times of economic turmoil, businesses transitioned to integrating a survival mode framework to keep their operations stable. The major focus was on the immediate challenges at hand. Yet, leaders were able to maintain sight of longer-term business goals and commitments.  

While the state of the ongoing crisis did become a distraction for many, their ongoing efforts to keep the business afloat were based on a more ethical and sustainable way. 

ESG is integrated to drive long-term company performance by increasing their valuation and creating new lines of business for enhanced consumer margin and reduced cost. 

For businesses that are fast-paced and growing rapidly, it is important for them to carve out time and resources to drive their ESG agenda. However, it is equally vital to identify the client’s aspirations to invest and do business more responsibly. One objective to consider is to set up an ESG working framework with a specific set of goals and accountability across departments.   

Read more: Sustainability Outlook: Top Emerging Trends in 2023 and Beyond 

SGAnalytics_Blog_ESG goals

ESG offers businesses a framework for conscious consumerism. It assists in attracting investors, building customer loyalty, enhancing financial performance, and making business operations sustainable. A strong ESG proposition enables them to tap into new markets as well as expand into existing ones. The pursuit of ESG goals helps in attracting talent and enhance worker productivity. Companies that fail to act in these areas are likely to face growing reputational risks from consumers and penalties from regulators. 

Regardless of the ESG propositions, research has shown that companies with social-engagement activities are perceived to be beneficial by the public and social stakeholders. However, without extensive planning, companies are less likely to achieve higher valuations than competitors with lower social capital. ESG is emerging as a key consumer preference, as customers are willing to pay more to go green.  

ESG is more than just doing the right thing  

Organizations are seeing ESG as a key consideration among institutional and private investors. Their decisions are being driven by peer pressure along with a desire to future-proof their investments. Ultimately, investors play a vital role in mitigating both financial and reputational risk. 

While ESG signifies different things for different people, the main purpose of ESG boils down to accomplishing business activities responsibly and establishing a framework in place to demonstrate due diligence. Consumers today are highly skeptical of brands that make huge commitments without displaying a plan on how they will reach them.  

SGAnalytics_Blog_ESG strategy

By establishing transparency in their achievements and building up proof points that serve as evidence of their journey, businesses can establish creditable accreditations. ESG goes beyond simply doing the right thing; it is the key to running a successful business.  

By implementing the right ESG strategy, businesses can yield high value. Yet significant barriers lie in realizing the full potential of the designed ESG framework. 

Read more: Spotlight on EV Battery Technology as the US looks to Challenge China’s Dominance 

Regulators and policymakers globally are taking action to present monitoring and reporting requirements for organizations with an aim to enhance ESG outcomes. However, these measures often present a double edge risk, making it difficult for companies to track and adhere to them.  

At the same time, shareholder mandates for organizations to follow ESG practices are rising. This has created new demands for ESG actions to improve the bottom line. With stakeholder demands continuing to change, it is creating pressure on businesses to deliver on several issues that are in conflict with one another. This implies that regulators, shareholders, and stakeholders are creating new barriers to the ESG transition, regardless of their intent. 

Organizations create ESG category frameworks to track progress as well as to keep their operations aligned. Without this kind of commitment, there can arise a risk of ESG becoming displaced on the boardroom agenda. However, industry leaders need to listen as well as understand the needs of the community they are serving and care about and not just implement things they think the community cares about. This is a crucial part of an ESG framework to gain clarity and humility. 


Read full blog: https://www.sganalytics.com/blog/how-businesses-can-stay-focused-on-long-term-ESG-commitments/

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