What is environmental, social, and corporate governance (ESG)?

Why should you care about ESG?

​​Caring about ESG is essential because it reflects your company’s commitment to meeting high ethical behaviour and accountability levels. Research shows that companies with high ESG scores outperform those without them. For this reason, you and your business need to consider these critical criteria when evaluating potential investments or partnerships.

ESG can be classified into three important aspects:

• Environmental impact of a business
• Social responsibility in the workplace
• Corporate governance and accountability

Each of these points is essential for different reasons and can bring incredible benefits to your business.

The environmental impact of businesses

Businesses have an enormous influence on the natural environment and climate. Your business activities may affect biodiversity in highly negative ways. For this reason, you need to know how your business operations may contribute to environmental issues and find the following steps to reduce or eliminate your business’ ecological footprint.

How to get started

To reduce your environmental impact, start with small steps such as conserving energy and water usage, utilising renewable energy sources whenever possible, and reducing waste. Implementing green policies like these that are tailored to fit the needs of your business can make a big difference for the environment. Additionally, educating your employees on how their actions can help reduce the company’s environmental impact will ensure a positive difference. 

By taking action now to reduce the environmental impact of your business, you make a positive change for our planet and position your company as an eco-friendly leader in your industry. Doing so can set you apart from the competition and ultimately help your business thrive long into the future. 

Benefits

The environmental impact of businesses is an important consideration. By taking steps to reduce their ecological footprint, your business can benefit in several ways. It will make your business more sustainable and ethical, and help you save money in the long run by reducing energy costs and improving efficiency. Furthermore, increasing awareness of green initiatives within your business can help attract customers interested in supporting environmentally conscious companies.

Social responsibility in the workplace

Social responsibility is about creating a workplace environment that is DEI for all employees. It involves considering business decisions’ impact on employees, customers, suppliers, local communities, and society. This includes promoting ethical behaviour while avoiding discrimination or exploitation within your business. 

How to get started

To start, identify areas where your business can make a difference. It’s time to create an action plan! Consider what small changes you can implement quickly and easily, as well as any more extensive projects that could be executed over a more extended period. Having measurable goals will help your business keep everyone on track and motivated to reach them.

Some of the most effective strategies for promoting social responsibility in the workplace include:

• Developing a clear company culture and communicating it to everyone. Highlighting how your business values social responsibility will encourage employees to make it part of their work practices.
• Supporting local organizations and charities in the community. This could be anything from donating funds to providing volunteer hours – whatever works best for you and your team!
• Implementing employee resource groups and employee value propositions, as well introducing inclusive recruitment practices by writing inclusive job descriptions and focusing on inclusivity through your interview process.

Finally, remember to communicate your social responsibility efforts internally and externally. You can do this through newsletters, press releases, employee recognition programs, and social media campaigns. This will help build a positive reputation for your business and encourage others to follow suit!

Benefits

You can benefit from embracing social responsibility in the workplace by improving employee morale and loyalty. Employees who feel their company is focused on doing good tend to be more engaged and committed to the company’s goals and success. Additionally, when employers demonstrate a commitment to social responsibility in the workplace, it can help create an attractive work environment that is desirable for potential employees. 

Social responsibility improves employee retention and engagement and makes your business more attractive to customers who may prefer companies with a reputation for doing good in terms of social sustainability. Lastly, embracing social responsibility can also give you a competitive edge in the talent acquisition process. People want to work for companies that care about positively impacting society. 

Corporate governance and accountability

Corporate governance and accountability are both essential aspects of a successful business. Corporate governance is the rules, processes, and systems that guide a corporation’s operations, ensure compliance with laws and regulations, and protect stakeholders’ interests. It includes policies related to corporate decision-making, transparency, disclosure of information, and risk management strategies. 

Accountability refers to a business’ responsibility to adhere to these policies and be held accountable for its actions or inactions. 

How to get started

Before starting, it’s essential to understand the concept of fiduciary responsibility. Fiduciary responsibility means that an employer has a legal obligation to act in their company’s or institution’s best interests. This includes taking all reasonable steps to ensure that decisions are taken ethically and concerning the welfare of stakeholders.

To start, ensure that there is proper oversight over decision-making. Since it can help ensure that issues such as conflicts of interest don’t arise.

Secondly, become aware of your legal obligations when reporting any financial information related to the business. Furthermore, you should also understand corporate governance best practices, such as having a robust internal audit system, appropriate disclosure requirements, and clear policies for managing conflicts of interest.

Lastly, understanding the importance of accountability and transparency means ensuring that any decisions align with your business’s values and mission statement. Any financial information is accurately reported to stakeholders and any complaints or grievances are handled promptly and appropriately. 

By understanding these principles and implementing them into your business practices, you can create an environment where everyone is held accountable. Doing this will help ensure the long-term success of the organization. 

Benefits

Good corporate governance and accountability practices can help your business succeed in many ways:

• Improves transparency: Having clear policies and procedures in place helps ensure that all stakeholders have access to information about decisions. This can help to increase trust within your business, improve public perception, and make it easier for shareholders to understand the company’s strategy. 
• Better management of operations and resources: Increases profits and improves efficiency.
• Promotes ethical behaviour among employees: Reduces the likelihood of unethical or criminal behaviour occurring throughout your business. 

As well as the benefits mentioned above, having effective policies is essential if you want your business to operate effectively and comply with all applicable laws and regulations. 

Interested in improving your business ESG? Start today by checking our 13 steps to improve your diversity recruiting strategy.