Kate Stubbs | Marketing Director | Interwaste | mail me |
Our resilience and adaptability have been put to the test more than ever over the last 18 months. As we enter the final quarter of 2021 and plan for 2022, one of the lessons the past period has reinforced, is the need for a longer-term, more sustainable approach to business.
This has given rise to a stronger focus on environmental, social and governance (ESG) principles and ratings. These standards are central to assist in measuring the ethical impact and sustainability of investment in a company. There is also an upward global trend in investing in companies with high ESG ratings as well as opportunities to access ESG funds and bonds.
The approach to ESG issues has shifted from being viewed by some as a public relations tactic to being seen by many as a major focus area for boards and management teams. There is a broad consensus that companies which manage, measure, and monitor their ESG matters proactively, are more likely to deliver sustainable growth.
Some of the main objectives and benefits of ESG analysis and reporting include the provision of valuable insights on non-financial elements which could have significant impacts on financial metrics, hence enabling more informed investment decisions. The broader range of information captured under ESG elements contribute to highlighting potential risks as well as future opportunities to develop a competitive advantage. ESG information also enables people to invest in and support companies that align with their values and that are creating a positive impact on the world.
The ESG framework is a widely accepted framework to measure impact and companies should try not to be all things to all people. Identifying three to five ESG criteria that align to your strategy and business sector is a good base off which to build your ESG framework. Even though the measurements may vary across platforms and industries, these are some of the common areas monitored within the three areas of Environmental, Social and Governance factors.
Environmental
The Environmental pillar evaluates a company’s impact on our natural resources including biodiversity, eco-systems and climate and these measures are a critical consideration for a more resilient future and of course, align strongly to incoming legislation that business needs to abide by.
Common measurements include:
- Natural resources
Raw material sourcing, land use, water and energy consumption are some key focus areas. What policies are in place to drive safe and sustainable practices concerning natural resources? Does the company use renewable energy sources?
- Climate change
What risk does the business pose on people and the planet as well as what risks could the business be exposed too from climate change factors such as drought, flooding etc. Carbon emission tracking and de-carbonization strategies typically fall under this measure.
- Pollution and waste
How does a company manage its waste? Does it have waste management strategy in place including waste avoidance, minimization, re-use, and recycling strategies? How is it mitigating pollution?
Social
Social elements of ESG focus on a company’s relationship with…
The full article is reserved for our subscribers!
Read the full article by Kate Stubbs, Marketing Director, Interwaste, as well as a host of other topical management articles written by professionals, consultants and academics in the October/November 2021 edition of BusinessBrief.
admin@bbrief.co.za | +27 (0)11 788 0880 |
