With sustainability and green growth becoming priorities for all countries, it is likely, not surprising, that more businesses are seeking ways to have a more positive impact.. This has led to the increase of ESG efforts, which stands for environmental, social, and governance, and has quickly become a way for many businesses to generate corporate value while reducing operational cost. This is why it is crucial to understand how ESG can unlock value for shareholders and stakeholders.
Creates Competitive Advantages
With ESG and sustainability becoming a priorities for policy makers around the world, it has become a greater focus for companies and the capital markets as well. By becoming more aware of how to utilize ESG in your own business, you can help create a competitive advantage over your competitors. Your business could not only become aligned on how to become more sustainable, but it can also be a positive move that customers support. Additionally, your business will be more equipped to handle any regulatory changes related to ESG and sustainability in the future. One striking example how to increase corporate bottom lines buy embracing green-growth, is to lower your carbon footprint and trade your carbon credits with other companies that are still carbon intensive. This will generate not only revenues but also greater societal externalities.
Shows Ethical Practices
Over the last 20 years disaster events (often attributed to climate change and human related carbon emissions) have become more intense and frequent causing high human and economic losses across the world. Because of this, the climate movement has gained momentum, and it is beneficial for companies to focus on reducing their carbon footprint. This is a great thing to consider because it will help reduce the stress on the environment while also showing ethical practices and green growth credentials. Being a green growth company will improve your customer retention as well as attract top level talent as both consumers and skilled individuals are seeking these change in their lives.
Provides More Investment Opportunities
With ESG and sustainability becoming such an important part of today’s world, companies and investors alike are shifting more focus toward it as well. As a result, more investment opportunities are popping up than ever before. This provides an excellent opportunity for companies to bring in more investors looking for companies that focus on ESG and sustainability. When updating your business plan to include ESG, ensure that your efforts are made public, particularly for potential investors. This can help drive more interest in your company.
Recruit Talented Employees
With younger generations focusing on finding moral, ethical companies to work with, becoming more focused on ESG can help recruit talented employees. According to the article from Nasdaq, companies with a focus on ESG tend to retain top talent, making it a great opportunity for your business.
To unlock value for investors, ensure that your plan to become more sustainable is strong and can be easily implemented.