Executives and boards of directors should be concerned with ESG reporting’s efficacy because it can offer several advantages to their businesses. On top of projecting a positive public image and aligning their practices with investor goals, organizations gain value by reporting on environmental, social, and governance criteria in the following ways:
1. Consumers are more likely to engage with companies that put environmental and social issues at the forefront. According to a McKinsey survey, 70% of consumers interviewed are willing to pay more for a green product that performs just as well as the non-green product. In another study, about half of the companies surveyed stated that business growth drove their sustainability initiatives. 2. Reporting on ESG reduces costs. By actually taking action towards a more sustainable business, corporations reduce raw material costs, water, and carbon costs, and manufacturing costs. Overall, their processes will be more efficient and less damaging on the planet. 3. Complying with ESG standards can relieve regulatory and legal pressures. Government action is less likely to be needed, and organizations could even experience governmental support. If companies refuse to adopt ESG practices, they could risk around a third of their profits to state intervention. 4. Employee productivity and satisfaction will increase. Organizations can attract quality employees who are eager to commit and stay loyal to a company that values environmental
and social matters. These employees will want to perform well when they feel they are personally having a positive impact on their society and planet. 5. Supply chain operations will provide more positive results. By caring for their suppliers’ well-being and treatment, organizations can see more quality materials and higher productivity. 6. By prioritizing sustainable initiatives, organizations can optimize their investment and capital expenditures. Capital can be allocated to opportunities with a greater return, such as waste reduction. It can also help companies understand how their investments in equipment, partners, or suppliers can impact their operations years down the road. Pursuing sustainable operations can improve a company’s bottom line. 7. Finally, corporations are afforded the opportunity to expand into new markets and existing ones because these corporations have developed trust with governing parties. These authorities are then more likely to permit access, approvals, and licenses.
11
Made with FlippingBook Learn more on our blog