4. It can reduce costs
ESG frameworks are far from being expensive projects that sink a lot of resources and don’t give anything back – they’re often the opposite, contributing savings to budgets and adding real value.
You can see the cost savings that ESG provides quite clearly in policies related to sustainability and the environment at a company. Many of the measures implemented in environmental policies at organisations can help to save money, by virtue of the fact that they’re fundamentally focused on using our existing resources more efficiently, as well as smarter. By investing in environmentally-focused policies and governance, you’ll also benefit from a whole range of other benefits, besides just the obvious benefit of positioning your organisation as a responsible, leader in its field that is interested in giving something back to society.
If you need convincing about how investing in environmental policies can actually save you money, take, for example, a particularly sore subject at the moment – the current price of energy.
Many of the measures that form the backbone of the ESG strategies of medium and large organisations have an indirect impact on reducing energy costs, whilst making the organisation more resilient to a constantly changing business environment. For example, implementing these environmental measures can help save a surprising amount of money:
- Reducing energy use by turning off unused lights, devices or heaters – lower overall energy usage and thus costs
- Improving insulation – improved energy efficiency, better use of existing heat, lower costs
- Installing double or triple glazed windows, or adding thermal curtains – improved energy efficiency, better use of existing heat, lower costs
- Cycle to work schemes – less car parking spaces needed on office premises
- Recycling rubbish – saving money in general
In a world where the cost of energy is predicted to continue climbing, and with little apparent Government help for businesses coming in the immediate to long-term, it’s vital that companies save every penny they can. Integrating ESG into your company governance structure and operation is a flexible, intelligent way to make sure every pound counts at your company.
- ESG measures, particularly environmental measures, by their fundamental nature are focused on making better use of existing resources and improving efficiency. As a result, organisations can find an increase in cost savings when implementing them properly.
5. It can improve brand reputation
One of the key effects of implementing an ESG policy is the fact that it builds strong connections between your organisation and wider society. As a result, it can help you to align your organisation with values and principles that your clients care about, and gives you the framework to take the actions that will add credibility to your brand reputation.
As Bo Bothe argues in this fascinating Forbes article, ESG reporting lets an organisation align itself with particular values that affect brand perception – in other words, it allows an organisation to associate itself with ideas, actions or principles that might have strategic market value in some way. Strong values at the heart of a brand also give it direct and purpose – two essential concepts to any organisation wanting to stay alive.
The days are long gone when businesses and organisations could expect to have the unconditional support of their clients: brands now need to fight for the loyalty of every customer.
Today, debates about ethics, trust and good governance have taken on heightened importance in the public consciousness following a range of ethical scandals, like the 2014 Diesel Emissions Scandal. As a result, it’s essential that organisations respond and show that their brands are responsible, can be trusted to act ethically and that are making the world a better place than they found it. ESG can do this, and do it well.
Put simply, people want to do business with organisations that share similar values. Nowadays, belief in the negative impacts of climate change, a desire to improve and support the local community they operate in, and in the need to have responsible governance are dominant concerns in society, and, as a result, they should be dominant concerns in organisations. Having a clear commitment to ESG bedded in throughout your company can help to bolster your reputation as an industry-leader and as a company that can be trusted to act responsible.
- Consumers want to do business with organisations that share similar values
- ESG policies can add credibility to a company’s brand offering, improving your brand reputation.