Why companies should go the extra mile
From reinforcing corporate values to enhancing reputations and attracting responsible investment, the list of reasons for companies to go the extra mile with ESG criteria is getting longer and longer. Undoubtedly, new rules and regulations are coming so businesses need to prepare now. In Europe at least, compulsory ESG company disclosures are on the horizon, audits of reported information will occur, and companies will have to take measures to adapt sooner rather than later.
Perhaps most importantly, the long-term gains of early, effective and far-reaching ESG implementation need to be emphasised. Alongside the nearly inevitable legal steps that have to be taken, an early move to integrate ESG into compliance and disclosures can enable an organisation to rethink its business model, take advantage of new opportunities and respond better to challenges.
Businesses opting for this route can also act as a role model for other companies seeking a more sustainable path, especially if those ESG values are loudly echoed by an enthusiastic tone from the top.
Another obvious reason to go beyond the minimum ESG standards is that new breed of investor. That could make all the difference to a socially-conscious investor who opts for the organisation which is making strides in reducing its carbon footprint and raising its levels of diversity as opposed to the other organisation that struggles with a poor pollution record.
Going the extra mile will make that ESG rating even higher while companies failing to adopt the appropriate measures will be seen as a riskier investment prospect while being exposed to risks. Some of the pitfalls of not taking action can include low employee morale, a bad reputation or even lawsuits, ultimately eroding trust with both customers and business partners. While the discussion about making ESG mandatory continues, companies ultimately have a responsibility to work towards climate neutrality regardless in order to make a positive contribution towards a more sustainable world.