The Importance of Sustainability and ESG Consulting for Businesses

Tesla CEO Elon Musk once said, “There is a clear path to a sustainable-energy Earth, It doesn't require destroying natural habitats. It doesn't require us to be austere and stop using electricity and be in the cold or anything.” In this day and age, with an impending climate crisis looming over our heads, this is no longer a luxury, this must be compulsorily followed. Governments are laying down policies for corporations to follow. Sustainability went from a buzzword to a mainstay in the corporate world.

If one is setting up a for-profit business, they should no longer set their sights on just profitability, hardcore capitalist approach is frowned upon, businesses must cater to being environment friendly, take up social responsibility and govern themselves with good conduct. This is not a motto in most nations, it is ingrained into the legal system, so if global expansion is concerned, the ESG Policies of that country are a must study. This may come off as intimidating, but this will pay off in the long run to those who implement it and patiently see it through.

Economic Repercussions and Regulations

According to a study by Our World in data, The world emitted 6 billion tonnes of CO2 in 1950. This had nearly quadrupled by 1990, reaching more than 22 billion tonnes. Emissions have continued to rise rapidly, and we now emit more than 34 billion tonnes per year. Emissions growth has slowed in recent years, but it has not yet reached its peak. The Montreal Protocol enacted back in 1989 served its purpose of eliminating the use of CFCs, this was the major milestone which paved the way for a lot of treaties which would be signed in the future.

This condition has led to a lot of scientific and technological progress which is currently revolutionizing the world, like the EV Boom, environmentally friendly architecture, eco-friendly consumer goods and many more. The policies shouldn’t be seen as a restriction on innovation, but rather as criteria to be kept in mind during development.

Climate change in the form of floods, heatwaves and pollution has destroyed billions of dollars worth of property and has resulted in countless ailments on human health. Climate change doesn’t cause damage directly, it is by these indirect methods that we see its repercussions.

Capital Acquisition

Investors are increasingly wary of where their money is parked. If the company is showing a good record of inculcating the ESG principles in their reports, it will take them a step closer to securing capital compared to competitors who do not embody those principles. ESG Consultants can help one navigate this issue. Employees of the current generation are increasingly drawn to companies which have strong affinities to their values, this will help in employee retention.

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 your firm 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 errors 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.