With Business Responsibility and Sustainability Reporting (BRSR) being made mandatory for the top 1,000 listed companies in India, businesses are becoming more serious about incorporating sustainability in operations, realizing that investing in sustainability strategies can be profitable for the business.
This has led to Environmental, Social, and Governance (ESG) taking center stage in the business world, with customers also becoming more aware and eco-conscious buyers. The growth and success of a business are directly tied to the ESG strategy it adopts. Sustainability and the environment are no longer just buzzwords but integral components of an organisation’s long-term success.
ESG strategies in business operations result in improved reputation, as investors and stakeholders will be more than willing to be part of an environment-conscious company. As an ESG-ready business, you are also more likely to achieve operational efficiency through optimised consumption of water, energy, and other resources. Organisations taking ESG seriously can also improve their financial performance and manage risks more efficiently than ever. In addition, ESG-compliant companies also have higher chances of attracting and retaining good talent and achieving long-term sustainability.
In this blog, we will discuss the art of achieving ESG success and the steps involved in the successful adoption of ESG.
ESG Adoption – The Crucial Steps
In today’s dynamic business ecosystem, adopting Environmental, Social, and Governance strategies is of prime importance for organisations committed to long-term sustainability practices. The following steps are crucial in adopting a comprehensive ESG strategy.
- Supervising Supply Chain Processes
It is crucial to understand and document the ESG practices of your vendors and suppliers, as their practices can significantly impact your ESG performance. Businesses can account for a substantial part of their ESG responsibilities by keeping tabs on how raw materials are sourced, handled, and managed by vendors and suppliers.
- Documenting Company Operations
Understanding company operations and various aspects, resource consumption and workforce is crucial for an ESG strategy. What’s also crucial is learning how the company manages and upkeep its assets. It helps in the evaluation of a business’s environmental and social impacts.
- Product Design and Impact
Product design is another significant factor in adopting a successful ESG strategy. The approach to product design should not only comprise the present utility but also take into consideration the post-customer use of the product and its impact. Companies, in the context of ESG, should therefore assess how their products affect the environment and society, and not just stop with their intended use.
- Ecosystem Management
This involves understanding the impact of your business operations on the ecosystem. This is essential in adopting a long-term ESG strategy and interventions should be made accordingly. Companies must ensure that their business goals and vision are aligned, with a minimised ‘corporate’ impression of the ecosystem.
- Circular Economic Approach
Businesses must look at hopping on the circular economy bandwagon while also looking for industrial symbiosis for procurement of resources, waste disposal, and end product use. ‘Product exchange programs’ will help in substantial waste reduction and create sustainable business practices, thereby aligning with the environmental and social aspects of ESG.
- Governance Practices
This pointer is a measure of a company’s compliance with the prescribed norms or the best governance practices. In addition to adhering to the norms, exchanging business practices with peers to promote co-existence and long-term benefits is an excellent way to achieve co-existence and other long-term benefits. Good governance is an integral part of the ‘G’ in ESG.
- Cultural Impacts
Globalisation of products has resulted in them having a larger, and more importantly, wider, multicultural customer base. This calls for a need to understand the impact of a product and its uses in different cultures. For example, vegetarians around the world might prefer to use vegetable oil and eggless mayonnaise. The need for customisation in such cases is crucial for the ‘S’ in ESG.
- Corporate Social Responsibility (CSR)
Companies must ensure that the money they spend on their CSR activities contributes to a larger good and impacts local communities and cultural aspects positively. For example, companies taking initiatives like extending support to local schools in educating students about local history and languages align with the ‘S’ in ESG. CSR must be a mandate in a company’s vision or business plan.
- Transparent Reporting
It is essential for companies to establish transparent reporting mechanisms to provide stakeholders with accurate information on their ESG performance. Regular and clear updates help companies in building trust with investors, customers, and even the public. Transparency in reporting also allows organisations to take accountability and makes room for continuous improvement.
- Pro-ESG Culture
Business owners should promote ESG as a culture within their organisations. This can be done through training employees and creating awareness about sustainability, the various ESG concepts and practices adopted by the company, and more. Promoting an ESG-focused culture is definitely beneficial for the organisation – ESG should be more of a shared responsibility throughout the organisation, rather than just the top-level management.
ESG today is emerging as not a mere reporting and compliance requirement but as a pathway to long-term success. ESG extends beyond profitability and enhances the organisation’s reputation, financial performance, operational efficiency, and more. With responsible and sustainable business practices, companies can not only implement ESG successfully but can also clinch a place in the growingly eco-conscious world, leading to long-term sustenance and growth.
If you are looking for guidance with regard to ESG, get in touch with us! We offer expert sustainability consulting services along with a comprehensive ESG platform that will help you stay on track with your business’s ESG goals and measures. For more information, visit our website.