Measuring ESG & Sustainability

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Before we outline the detail and benefits, following are ESG and Sustainability definitions:

ESG DEFINITION:

Environmental, Social, and Governance (ESG) refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. These criteria help to better determine the future financial performance of companies (return and risk)”

SUSTAINABILITY DEFINITION:

Sustainable practices are the processes services employ to maintain the qualities that are valued in the physical environment. Living sustainably is about living within the means of natural systems (environment) and ensuring that our lifestyle doesn’t harm other people (society and culture).”

Improving your Sustainability practices has a direct impact on financial performance. For example, cost savings , higher margins, increased engaged customers, more investment and establishing a clear competitive advantage are benefits being realised by fast thinking businesses. Organisations who implement sustainability practices outperform those that don’t, so ignore it at your our peril.

Consumers demand it!

Consumers demand sustainable products and transparency, preferring to buy from purpose driven organisations. This shift in consumer sentiment has businesses pivoting, implementing new thinking! Here lies the opportunity to drive change in your business , placing your customers in the middle and making sure that your purpose is clearly communicated .

Suggested Sustainability related quick wins

Diversity & work practices

Attracting a broader talent pool is becoming a business norm across most sectors, regardless of size. For example, acquiring “New Talent ” from technology companies, whom possess digital experience, provide immediate incremental value because this skill set is typically lacking at traditional businesses.

Gender along with ethnicity are key to reshaping your teams – attracting a balanced talent mix to improve your performance. “The more diverse your team is, the more opportunities you’ll have to approach a problem from different angles. In comparison, homogenous teams are more likely to approach a problem from a similar viewpoint, limiting their number of potential outcomes.”

Consumers along with potential investors have a low tolerance towards businesses who exploit workers at the company level and across the entire supply chain. Are your partners transparent about their worker payment practices?

Operational Tweaks

Cloud Computing, web-based data storage, and other technological advances are replacing traditional IT practices. Consider outsourcing your technology infrastructure, saving time and reallocating resources – focus on growing sales along with other priorities.

Climate change is having a profound impact on many sectors. Investigate how it could affect your company so you can mitigate potential financial and reputational risks.

Scale your business for further investment

Now your improving your sustainability efforts, it’s time to organise yourself for the next growth phase: potential investment.

Institutional investors, mainly large Super Funds, are increasingly investing into start-ups through venture capitalists. During this process they apply strict sustainability and ESG screening: ensuring that these companies implement ethical and sustainable practices. If you don’t adhere to their basic sustainability expectations, you won’t receive investment. It’s as simple as that!

To that end, please consider benchmarking your sustainability and ESG progress. Log into Digital Benchmark for free and start making this part of your routine.

Sources:

https://www.nielsen.com/hk/en/press-releases/2016/consumer-good-brands-that-demonstrate-commitment-to-sustainability-outperform-those-that-do-not/

https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity

https://www.nielsen.com/us/en/insights/report/2018/finding-success-through-sustainability/

https://hbr.org/2019/02/yes-sustainability-can-be-a-strategy

https://thenextweb.com/entrepreneur/2019/04/10/why-diverse-teams-make-better-business-decisions/

https://hbr.org/2016/10/the-comprehensive-business-case-for-sustainability

https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters

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