ESG stands for Environmental, Social and Governance and is a theory that there is an ethical way to do business. This method involves prioritising the environment, being socially responsible and ensuring there is transparent governance. But what exactly do these ESG criteria entail?
With the threat of climate change being ever-present, many organisations are looking at how they can become more eco-friendly. The main benefit is self-evident: you get to keep our planet habitable.
However, if that doesn’t encourage you, then studies show that young consumers are beginning to prioritise sustainability over cheap deals. There has been a growing rise, especially during the pandemic, in the backlash against fast-fashion and a push for zero-waste products. Your organisation should make it clear that you are committed to being green to maintain your financial performance!
The environmental issues your organisation should consider are:
- Your Carbon Footprint — this concerns how much energy, gas and water your operation uses, including how much is used during any business travel.
- How sustainable are your processes — you should ask yourself: how much waste do we produce on a day-to-day basis? How much strain is using this material putting on the climate? Is there a better way to do this?
Remember, even if it is more expensive at first, most sustainable processes will work out cheaper because they are not as reliant on materials that are becoming increasingly scarce. You will have to spend the money eventually!
Being an ethical organisation is not limited to your ecological efforts. Ensuring that your supply chain is fair trade and that you are committed to diversity is also the way forward. We have previously written about how diversity and inclusion can improve your business.
Profitability is a great motivator, with younger investors wanting to guarantee socially responsible investing, so their money is “clean”. However, sustainable investing is more than just “good business”. It is smart business. If you ensure your supply chain is legally compliant and ethical, you reduce your risk of lawsuits and attract ESG funds.
Another way to improve the S in ESG is to get involved in your local community. You could set up “giving back” projects. Here at Convene, we love sponsoring local sporting events that help communities come together and make sure every kid has access to a sport they enjoy. For a few years now, we have sponsored the Herne Hill Velodrome’s track league. Ensuring you have a standing in the community and amongst your stakeholders will improve your “social score” and ultimately bring you more business. It truly is a win-win scenario!
As a Board Portal, we know a lot about the importance of good governance. Governance in an ESG strategy is all about being open and transparent within your organisation and to the public. Being open and transparent will make you accountable for your actions and ensure the public has more faith in you. If your clients trust your word, then you will have more business.
Another element of good governance that comes under ESG is employee relations. If you maintain a good employee morale, and you are a good organisation to work for, then you become more ethical. Overworking your employees only leads to a high turnover and poor results.
Take the gaming industry as an example. For many, it is a dream job, but they can end up with severe burnout trying to get a product ready by its launch date. Despite this, when a game finally launches, there are complaints of bugs. No one can produce a good quality product in high-stress conditions. Moral of the story is: provide for your employees, and they will perform their best.
Benefits of having an ESG strategy:
Being an ethical company doesn’t only bring you good karma but also, good business. It has been proven that companies who have a solid ESG strategy are just as profitable or outperform their unethical counterparts. In fact, if you focus on ESG, you are 40% more likely to produce a profit margin of double that of your competitors.
As mentioned, companies that have a focus on ethical production tend to have better brand loyalty. Clients that keep coming back and love your products are more likely to recommend them to their peers. In fact, a GWI Brand report states that 47% of people discover new products through recommendations from friends. So, brand loyalty does not only keep customers, but generates more!
Talking of loyalty, companies that focus internally on ESG also retain employees for longer. In our post-career path world, keeping employees is tough. However, just like the story about the gaming industry earlier, if your work environment is toxic it is even tougher. Nothing would be possible without your workers, so treating them well motivates them to want to perform.
How Convene can help with your ESG goals:
Firstly, we are a paperless solution. This dramatically reduces your carbon footprint and your office waste, whilst also saving you time. Time is money, but so is paper! We also have committed to replanting trees with the amount of paper you will save. If you are already a customer, please let us know how much paper you have saved this year, so we can plant those trees!
Secondly, Convene can help you with your governance practices. We can help you streamline your processes so minute taking and auditing become a simple procedure. Using a Board Portal ensures that Board Packs are easily accessible for your Board Members and, in case they ever need to be reviewed, we have a document library! This means you can be as transparent as you want if you choose to share your Board Packs beyond the Board level.
Alongside this, we have developed our own ESG reporting tool: Convene ESG. Our aim is to alleviate some of the challenges of ESG data gathering, performance tracking, and reporting for ESG factors so organisations can move towards global sustainability. Convene ESG users are able to track progress, set goals, see best practice and produce a ‘funding-ready’ SRS report.