What is ESG?

ESG is an umbrella term for Environmental, Social, and Governance, which are the three most important aspects of measuring sustainability. ESG is the global standard for measuring your business' sustainability. Because of this, it is increasingly more reflected in international laws and regulations also affecting SMEs.

The financial benefits of ESG

Incorporating sustainability into business strategy helps companies reduce ESG risks. This ensures long-term financial stability. Research shows sustainable companies have more stable stock prices and achieve higher returns than their competitors. This is evident across several sectors. In the energy sector, for example, sustainably engaged companies score 20% higher than others. Similarly, sustainable companies score as much as 15% higher in IT and healthcare. This demonstrates that companies that focus on sustainability are arguably more profitable.

ESG increasingly important in mergers and acquisitions

A study by Deloitte found that as many as 70% of companies would not go through with a merger or acquisition due to a lack of ESG strategies within a company. Falling behind on sustainability is thus a growing risk. Most companies in this study would pay more for companies with solid business strategies regarding sustainability. According to Deloitte, ESG is more critical than ever in business, focusing more on objectively measuring, improving, and communicating it. Sustainable and universal frameworks provide increasingly accurate reporting and clearer insights. Ultimately, this makes choices for collaborations and business valuations more transparent and insightful.

Why is this important for your business?

Good sustainability performance is seen as increasingly valuable and can increase your company's value. In addition to making your company attractive to stakeholders, an ESG strategy leads to financial success. Moreover, every pound of profit from a more sustainable company is worth more than an unsustainable company. Customers and employees also value a company's sustainability. For example, two-thirds of the consumers are willing to pay extra for sustainable products and services and 64% of millennials are not considering a job at a company that does not have a Corporate Social Responsibility (CSR) or sustainability stragety. ESG makes your company more attractive to potential customers and employees and increases corporate value.

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‍Starting with sustainability in your business can be challenging. Our sustainability platform, using international sustainability frameworks, can help you measure, communicate, and improve these components. We would be more than happy to help! Get in touch with us here.