Understanding ESG and Its Importance For The Future
As the entrepreneurial world evolves at a blistering rate, and business worldwide look to adapt to an ever-changing landscape, there’s no better time to familiarise ourselves with the language that surrounds new and emerging ideas.
The chief among these is the concept of ESG, or Environmental, Social and Corporate Governance. A relatively well-established term, having been coined as far back as 2004’s UN initiative between financial institutions, it’s only the last few years or so that we’ve truly started to see ESG take root.
But what exactly is it, and why does it matter? We’ve sat down and done the research to better plot out what ESG means, how it’s set to revolutionise approaches to business going forward, and how we intend to implement it across my businesses and endeavours.
What Exactly Is ESG?
It’s first crucial to fully define what we mean by ESG. While we might be familiar with the acronym and the words it stands for (Environmental, Social and Governance), it can be a different area entirely to understand what they mean to businesspeople and those in a variety of corporate sectors.
They act as guiding principles, pillars by which to create a more sustainable and forward-thinking plan for your business. Let’s begin by breaking each section down, and look at what they encompass.
#1 – “E” Stands For Environmental
Naturally one of the more pressing issues facing businesses, particularly with the environmental aspect of ESG is one of the more immediately recognisable. It’s one that we’ve naturally always aimed to encompass in what we do, and it only makes sense that it makes up a substantial proportion of what many strive to do as part of the ESG initiative.
As part of that, you’ll find key environmental initiatives and schemes that most (if not all) entrepreneurs categorically must include in their future plans. That’s inclusive of:
Of course, as much as you’ll doubtless do as much as you can to improve and refine your own personal processes, it’s also crucial to consider any tertiary contributors towards your environmental impact.
This could be something as simple as your consumers (if you provide a physical product), but also includes the choices you make when it comes to your supply chain and the people who offer the raw materials with which you create your products or services.
#2 – “S” Encompasses Your Social Commitments
A major consideration of any conscientious employer, and a crucial aspect of the inclusive culture that we all seek to imbue into our workplace ethos, social initiatives are integral to planning effectively for your company’s approach to ESG.
We’ve always been of the mindset that putting the right people in the right places, regardless of who they are or their background, is absolutely pivotal, and that forms the crux of the social commitments we make as part of our businesses.
Of course, that’s not where it ends. For many, it’s a challenge to better represent themselves in a more social sphere, although there are a few different methods that we’d personally recommend to ensure that you meet that particular aspect of ESG.
For instance, you could:
Ultimately, any social pledges or schemes you undertake should always be done with the intention of providing some form of societal or wider improvement. That might only be slight, insomuch as the right person can make all the difference to their working environment, but it’s a positive step in an extremely positive direction.
#3 – “G” Represents (Corporate) Governance
Corporate Governance, or the way in which our businesses serve our corporate partners and shareholders, is the final component of the ESG triangle. For some, this might be seen as the most integral part of that approach, especially as it serves to uphold that all-important bottom line.
For others, it’s less impactful than the work you do in relation to Environmental and Social initiatives. Prioritising those over profit margins, if only in the short term, ensures a more sustainable future, and one that’s easier to forecast.
We’re firm believers in a dual approach, one that still seeks to provide the shareholders and the senior leadership teams across our companies with the support and reassurance they need to meet those targets, but that also looks to what’s still an uncertain future and seeks to provide the much needed stability and forward-thinking that a modern entrepreneurial spirit requires.
We’ve sought to interweave these in all that we do. They often operate in the background, but serve an incredibly important purpose for those both internally and externally. Across each company, you’ll often see:
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All of these aren’t just a box-ticking exercise, either. Time and time again, we’ve seen countless successes through placing the right people in the right places, and through ensuring an open approach to how we deal with metrics.
Why ESG Is Fast Becoming An Essential Consideration
While much of the make-up of ESG has practical and pressing applications that are more immediately obvious, it’s important to look more widely at the different aspects of it, and how these have quickly become a more integral part of business.
I alluded to the extensive history of ESG in my opening paragraph but, as the planet collectively becomes more environmentally-conscious, that’s taken on far more significance. Changing societies and a struggling planet are just two of the main driving forces behind that shifting focus, but the wider impact of ESG goes far beyond that.
Conscientious investors are already looking to place their funding, their time and their efforts into companies that have a clear plan relating to ESG, and by opting to do that as part of your initial plans, you’re already ahead of the curve. As an angel investor, I know that’s something I look for in my next endeavours.
It’s also an indicator that you’ve carefully considered the future, inclusive of financials and people. Recycling initiatives, for example, help to lower overheads, and investing in people – through CPD, courses or effective management – paves the way for the right decisions, the right minds, and crucially the right ideas.
That filters down to clients and customers, too. Research from the McKinsley Quarterly showed that not only are consumers more likely to choose a business whose ESG credentials are front and centre, but that they’re also willing to spend more (up to 5%) with businesses who have a particular affinity for the principles which make up the ESG guidelines.
Chief among these is the Environmental aspect of that. We naturally look to the companies and the people who take that forward, and for good reason – climate change is rapidly becoming an irreversible issue, and those who are taking that as seriously as it deserves to be take are naturally a more attractive prospect than those who wilfully ignore it.
Similarly, proper representation and effective appointments throughout the company’s structure offer more of an understated way to ensure that your company is a welcoming environment. Ultimately, inclusivity and diversity not only presents you as an equal opportunities employer, but one that understands that a different approach or mindset is essential for the future.
How Our Businesses Already Embody That Spirit
ESG has long been a focus in what we do. I’ve had substantial good fortune over the course of my career, not least in the funding I received from the Princes Trust, and I understand what it takes to succeed where many fall down when it comes to the environmental initiatives we push.
The most abundantly clear in all of this is how I appoint those in senior leadership teams. Take Churchill Support Services, for instance – one of my most flourishing success stories, and a point of pride particularly from an ESG perspective.
More than half of the senior managers in the business have worked their way up, climbing from apprenticeship and starter roles to the heights they find themselves in now. There’s a strong representation across the board, and there’s good reason outside of diversity and inclusivity for that.
Those people have the relevant experience and knowledge engrained in all that they do. They understand that company inside out, and far better than I can hope to. It all comes back to something we’ve long since held close across the board – putting the right people in the right places.
That distilled approach allows us to take a tandem approach to both the “S” (Social) and “G” (Governance) aspects of ESG – we’re appointing a range of people, from a wealth of backgrounds, who know a vast array of information on their relevant areas. That more than accounts for the social aspect of ESG, but also allows for comprehensive and intelligent governance.
A strong ethos and an intrinsic system of virtues ensures transparency and integrity in financial reporting to the shareholders and investors, as well as a keen sense of humility and culpability should anything go wrong.
In terms of the all-important Environmental approach we’ve sought to take, that is by necessity unique to each business. One of my more recent investments, Tariff, seeks to pave the way with intelligent net-zero initiatives aimed towards businesses, along with continued investment in Carbon Credits through Wanderlands.
We work tirelessly together to ensure that each business’ plans for the future, especially in relation to its environmental initiatives, tailor-making what they intend to do and exactly how they intend to do it.
We’re also making waves in a more understated way, too, especially with electronic signature service eSign. Pioneering a paperless way to securely complete formal documents, eSign’s transformative approach to digital strategy has already netted major clients across the NHS and in financial services.
That also has the additional benefit of encompassing a more eco-friendly and intelligent approach to how we collectively look at the whole corporate process. eSign is a true sign of things to come across the wider business spectrum, and our exceptional work has already started to earn the plaudits it deserves.
At its core, though, our collective approach to the Environmental aspect ESG is one of conscientious usage of materials and resources, encompassing renewable energy and emerging ideas wherever we possibly can, in order to truly look beyond that horizon and establish meaningful plans for the future.
With all that in mind, we look to a future that’s characterised by prosperity and punctilious planning rather than the consternation with which might otherwise view it. Embodying the core tenets of ESG is akin to illuminating a more welcoming, inclusive approach to the future, and one that benefits both the planet and its people.
We now set our sights on continuing that long into 2024 and beyond, and consistently seeking to better stand for those deep-rooted values. That’s across every endeavour we undertake, and it’s something I’ll personally take forward as I continue to invest.
Love this insightful take on ESG's importance. Have you considered leveraging interactive content like quizzes or polls about each ESG aspect to engage your audience in a dialogue, then using segmented retargeting strategies to provide personalized content? This could magnify your message's reach and impact.
Growth Leader | Corporate Sustainability Engagement
8moESG is indeed essential for a sustainable future. I focus on reducing waste and promoting renewable energy sources. Socially, I support education initiatives. Ethical business practices ensure trust and long-term success. Let's keep making positive changes together