The strategies that every business should adopt

A company must offer the best possible work it can. However, the good results of the work are not the only criteria for qualifying as a good business. Another factor of critical importance is ESG, which if you don’t know, it’s time to learn it and also to know its importance!

What is ESG?

ESG stands for Environmental, Social, and Governance. This is how businesses assess their impact in these key areas, but let’s look at them in a little more detail.

Environmental

The environmental criteria refer to the way in which the company affects and respects the environment, as well as how it deals with climate change.

Social

Social criteria refer to the way the company treats its employees, suppliers, customers, etc. It takes into account Labor and Human rights, animal rights and consumer protection as well as employee health and insurance and gender equality.

Governance

Corporate governance refers to the way the company is run, business ethics, remuneration and employee rights as well as the transparency that exists in the company.

Why are they important criteria?

Since we live in an age where the need for sustainability and responsibility is urgent, ESG factors are extremely important. In a world that has to deal with climate change, social inequalities, and the great need for transparency it is important for every company to act with ESG in mind!

With ESG as a guide, companies can more easily identify and manage risks, improve their responsibility towards society, strengthen long-term sustainability, and satisfy the expectations of their partners and the public!

More specifically, a company that thinks about and cares about sustainability and the environment reduces its negative impact on the environment, which is critical in addressing climate change and conserving natural resources. Also in this way, the company creates a sustainable business model which is more likely to withstand the challenges of the future.

A company that takes care of its employees and its customers attracts better people and thus creates stronger relationships of trust, strengthening the corporate reputation. Transparency in management and ethical decision-making reduces the risk of scandals or mismanagement.

Companies that adopt ESG strategies are not only making an ethical decision but also a smart business decision! Before answering why, it’s worth mentioning that according to a 2023 review by McKinsey & Company, companies with strong ESG practices have better financial performance than their peers. Research showed 23% higher profitability and 30% higher likelihood of long-term success.

This is because companies with strong ESG practices have better risk management and governance, which protects them from unforeseen crises, legal issues, and regulatory penalties. These companies attract investors and customers who value accountability and building long-term relationships of trust.