Why ESG is a must Factor for Investors and Businesses

The first goal on the list of any business is to have strong growth and good profitability, this has been the de-facto rule for ages, but in the relentless pursuit of profitability the externalities produced by the companies have yielded more harm than good for the planet and this strong drive for monetary profit won’t sustain the ecosystem for long, changes have to be made if a better world is to be left for the future, there is no better time than now to do ethical sustainable business and support responsible ESG(Environment, Social and Governance) for the future. When a company adopts ESG principles, its corporate strategy is centred on the three pillars of environment, social responsibility, and good governance. This entails taking action to lessen waste production, pollution, and CO2 output. Additionally, it entails having an inclusive and diverse workforce, from entry-level employees on up to the board of directors. ESG may be expensive and time-consuming to implement, but it can also pay off in the long run for those who see it through.

Economic repercussion of climate change

The general notion of thought is that the weather and climatic conditions do not impact a business in any way, but that’s only on the surface, climatic conditions impact businesses in indirect ways one cannot fathom such as extreme heat which deteriorates the quality of raw materials which is used in processed and organic food in the food industry which leads to health complications spiralling into a business’s reputation and in-turn their sales and the wide-scale damage caused by natural human aggravated calamities is in the trillions. The longer we delay in adapting our business models to be minimally harmful to our surroundings, the more the cost will compound when left for a later date. Investors have to consider the impact of a heating world on their investments and have to educate themselves on the economic ramifications of climate change and join hands with policymakers and corporates to help them and set suitable benchmarks for sustainable business. The drive for short-term profits must be seriously reconsidered in the current model of profitability

Consideration of people and relationships

The ones who make up an organization are the employees and their customers. No organization can sustain itself if they do not care for them. In the wake of the rapid call for unionizations and human rights movements. Businesses must form a framework where the employees are given good working conditions and the customers are treated fairly in the services they are given. This is the main attribute for any business to thrive, failing to do so may jeopardize the business. Investors are increasingly wary of the human resource aspect of any companies before they park their money in them. As for tech companies, it’s the trust of the users who believe their data is well secured, compromise in any data is not to be tolerated as it leads to loss of customer trust and law violations. There have to be measures in place so that the employees are given a fair livable wage.

Norms for governing a company

A company can only be trusted as transparent as it is. No one will trust a business that deals in the dark. The reports produced by the company are the major source of information for their investors. Great care must be taken so the companies do not fall under scrutiny for dishonest practices. The board operations and the auditing structures must be well-defined. Corrupt practices within the company must be dealt with accordingly, contributing to the weaker sections of society is a noblesse oblige. Accountability must be held for the violations committed. The bottom line is that ESG investing focuses on companies that follow positive environmental, social, and governance principles. Today, investors are increasingly eager to align their portfolios with ESG-related companies and fund providers, making it an exciting area of growth that also has positive effects on society and the environment.

Whether or not ESG investing is right for you depends on whether you want to combine your values with your investments. In a nutshell, the capitalist form of business has taken our civilization to great heights, the seeking of growth “by any means necessary” has propelled us to the life that is being led now, and the price that has been paid is an astronomical one. Investing should take sustainability along with scalability and profitability as a criterion, the tunnel vision to short-term growth has left us blind to the errs that have been committed in the long run. The sooner we modify our visions the better, though there is no clear taxonomy for ethical practices, now is the best time to think for the distant future and become better for a better tomorrow.