Without a doubt, the potential and investment opportunities of ESG trends have gained momentum in the corporate world. Simultaneously, policymakers continue to raise the bar on sustainability goals, overwhelming the integration of ESG prospects for many businesses. Hive Life’s ESG guide will break down the scale and spectrum of ESG functions, and ways to incorporate them into your business model.
Sustainability trends in the Asia Pacific region (APAC) are growing exponentially, and becoming a priority for many, marking the global shift to focus on the social and environmental aspects of a business to ensure sustainable economic growth. The ongoing pandemic and recent financial market upheaval raised the important question of traditional companies’ direct impact on our ecological and social world.
Environmental, Social, and [Corporate] Governance (ESG) steps in as a plausible framework to measure, assess, and implement sustainable and conscious initiatives within a company’s structure, showcasing how a green business can be both economically viable and socially responsible, which in this modern age is more than just an attractive quality. Much rather, it sets a precedent for future investments and opportunities, as firms and investors increasingly rely on ESG factors, prioritising green investments to align with their changing values and goals.
Furthermore, ESG is proven to facilitate business growth and profitability, creating long-term value, through talent retention, cost reductions, and fortifying trust within corporate culture and investors, as well as consumers. Research by McKinsey, found that “by effectively enforcing ESG, companies can combat rising operating expenses, (i.e. raw-material costs and true water or carbon costs), by cutting down up to 60% of the total costs.”
From small businesses to larger corporations, many have committed to accelerating their efforts to drive sustainability together with their financial success, to boost company profitability, and safeguard from future risks.
What is ESG?
Environmental, social and corporate governance, otherwise known as ESG, is a model criterion for corporations and investors to effectively evaluate the extent and approach of a company’s social responsibility goals and objectives. This goes beyond accessing its role as a mere profit-making business and pushes for corporate transparency and accountability to enable real-time actionable.
According to the MSCI 2021 Global Institutional Investor Survey, it reported “Investors in Asia-Pacific increased their ESG investments by 79%, either “significantly” or “moderately”, while another 57% expected to incorporate ESG considerations into their investment analysis and decision-making processes by 2021”. The uncertainty that followed the Covid-19 pandemic further drove capital investments into the environment, social, and corporate governance (ESG) models.
Widespread recognition of ESG has strengthened the reporting requirements making it essential and beneficial for corporates to adopt ESG practices into their branding and workplace policies. This guide helps break down the three pillars that makeup ESG – environmental, social, and governance, and introduces ways to integrate them into your business model.
The “E” stands for environmental, which measures the sustainability impact of a company on its surrounding environment, and facilities reporting on certain aspects, including carbon footprint, resource allocation and management, green growth and efficiency, as well as sustainable goals for the future.
Climate change being the key area of environmental concern has prompted an increasing number of corporations working to reduce their carbon emissions.
In an MSCI report, it found that APAC countries are among some of the names leading climate change-related initiatives, “with up 50% of investors in the region, claiming to assess climate change metrics while major decision-making.”
Tackling the climate crisis is seen as a major priority in APAC countries, and ESG helps facilitate that through feasible implementation and a set of clear carbon emission reduction targets.
Businesses can incorporate many environmentally conscious practices into their workplaces, such as reducing overall energy consumption, replacing energy sources with renewable ones, innovating in the development of sustainable products and services, and promoting zero-waste policies.
SouthPaw is a sustainability consultancy, founded by Hong Kong’s pioneering expert in the field, Rebecca Walker Chan. Understanding the issues faced by startups and SMEs in comprehending and implementing ESG into their businesses, SouthPaw strategically crafts a versatile solution personalised to cater to different values, goals, and needs and provide ESG reporting on a company’s sustainability performance. The consultancy can further educate on the effectiveness of an ESG framework, as well as ease complex processes for a seamless transition.
The social aspect of the ESG model emphasises the impact of a business’ interpersonal and corporate relationships within an organisation, its partnerships, and public presence. Nowadays, the success of an organisation is weighed through fairness and equity to its people and corporate body. Thus, investing in socially ethical business strategies creates positive prospects for employees, the workplace, and the surrounding community.
Workplaces play an important role in the ESG paradigm, as a telltale sign of corporate culture, measured through its ability to retain and expand its workforce, in addition to demonstrating its commitment to social responsibilities and ability to create diversified and inclusive workspaces.
Read more: 5 Ways Technology is Cultivating Diversity and Inclusion in Workplace
As equality and equity remain at the core of the social aspect, businesses can include various practices to enable sociality and ethicality, in order to build an attractive community for employees, customers, and investors alike. First and foremost, in this digital era, companies must ensure data security for all customers and employee databases, by strengthening security and protection measures. Alongside cybersecurity, it is essential for businesses to prioritise workplace safety and wellbeing, by creating more diverse, inclusive, and safe spaces.
These positive social strategies promote a well-connected and circular workplace, where employees are recognised, appreciated, and their wellbeing prioritised.
Read more: Workplace Culture: 6 Ways to Foster a Positive Work Environment
Corporarte governance details the systematic approach to which a company is directed and operated. This encapsulates the overall outlook and process of corporate decision making, disclosure of important information, and the logistics and operations behind it. Governance works in conjunction with the environmental and social aspects, as it aims to fundamentally improve transparency and accountability around an organisation’s ESG framework.
In retrospect, it provides stakeholders and potential investors with vital information on the company’s sustainability and social impact. What you can assess, you can improve; having a definite blueprint on ESG goals could better assist with governing and pursuing desirable measures.
Some corporate governance practices include promoting diversity in leadership and ensuring a transparent workplace culture, where employees, stakeholders, and investors are well-informed about a company’s backend and financial performance, as well as primary business strategies and operations.
Furthermore, companies should also commit to traceable, sustainable, all-inclusive, and transparent supply chains, while improving labour rights by encouraging freedom of expression and making genuine efforts to address issues throughout a product or service’s life cycle.
How Small Medium Enterprises Can Incorporate ESG
For emerging startups, as well as small and medium enterprises, ESG presents a myriad of benefits and additionally opens growth and investment opportunities. Adoption of an ESG framework into your business model promotes sustainable development, green operations and investments, and reduces intangible risks which lower overall losses and costs. Moreover, implementation of such practices is proven to improve overall corporate culture, talent retention, productivity, as well as reputation and engagement.
Eqologic, a separate division to the Equasia Group, is a well-known name in corporate finance, and a management consulting service provider, with expertise specialising in sustainability and ESG solutions. Extending their services to investors, SMEs, startups, large corporates, along with government bodies in Asia.
The consultancy offers various services for businesses to incorporate and be in compliance with the sustainability and ESG norms and regulations, for SMEs specifically, it provides in-house training services, ESG regulatory compliance and reporting, and measuring the impact of its performance to assess whether sustainable objectives are met.
ESG for emerging businesses helps maintain their competitive edge through emphasising their economically and environmentally viable solutions, including product and service offerings, values and goals, and overall brand image. Spurred by the global climate, as governments continue to implement stricter frameworks for businesses, ESG will soon be fundamental for success.
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