Updated: Jun 1
Have you ever heard of sustainable investment?
It is an umbrella term that seeks positive returns and long-term impact on society, environment and the performance of your business. By now, we all understand the importance of investing in sustainable business practices. What was once considered a company mission to do social good is now a business imperative.
The proof is easy to see. There are a lot of thriving industries that are economically viable – and at the same time, they’re doing good for the world. Take solar and wind energy, for example. Those industries are among the fastest-growing and contributing to an expected $2.15 trillion global renewable energy market by 2025.
Although we can’t live in a world with just solar and wind energy, we need other businesses too. So, how can one company grow tremendously fast and contribute to the world too? ESG- Environmental, Social Governance
The Financial Times Lexicon defines ESG as “a generic term used in capital markets and used by investors to evaluate corporate behaviour and to determine the future financial performance of companies.” It is used by investors to evaluate corporations and determine the future financial performance of companies.
Things ESG will do to your company:
1. Strong ESG programs can increase stock flexibility:
When companies pursue a stakeholder-centric approach to value creation by incorporating ESG into their long-term investment strategy, they're able to attract the best talent, build loyal customer bases, prosper through strong corporate governance oversight, mitigate risk, and drive profitable growth by investing in sustainable innovations that positively impact the world.
Therefore, modelling a business around ESG can be an underappreciated source of sustainable competitive advantage, which is why these companies can boast such strong business fundamentals and generate market out performance.
2. ESG initiatives can unlock competitive value.
Companies that recognize the importance of adapting to changing socio-economic and environmental conditions are better able to identify strategic opportunities and meet competitive challenges. Proactive and integrated ESG policies can widen a company's competitive moat relative to other industry players.
3. ESG Investors are "long-lasting"
ESG investors are values-based investors who are more interested in what happens during the next decade than the next quarter; they understand that change takes time. Investors incorporating ESG into their mandate often work alongside a company to strengthen it
Would you like to try on the ESG policy for your company?