We live in an age that takes environmental concerns more seriously than ever. This includes intentional and active participation at private, public, and professional levels. Companies of all sizes are expected to assume responsibility for the part they play in the well-being of the planet. Inspired by the climate change movement that began in the 70s and addressed larger corporations, ESG has come a long way in terms of implementation. The UN was the first to assemble the term in their report titled “Who Cares Wins,” published in 2004.
What is an ESG Report?
An ESG Report is a set of data that lists the sustainability practices of a company. The three areas it explores are in the title: E for environmental, S for social, and G for governance.
Environmental (E)
This aspect focuses on a company's impact on the natural world. It covers factors such as the company’s carbon footprint, their recycling practices, building layout, waste management, and energy usage. By addressing environmental concerns, companies can manage and reduce risks related to climate change and resource scarcity. It additionally helps them to explore opportunities for innovation and efficiency.
Social (S)
The social dimension of ESG encompasses around how a company interacts with its employees, communities, and broader society. It includes considerations such as employee safety and health, diversity, equity, inclusion practices, labor standards, and community engagement initiatives. Prioritizing social factors not only fosters a positive workplace culture but also enhances reputation and strengthens relationships with stakeholders. This can be apparent in a myriad of ways, whether that’s designing products that benefit our clients or involvement in philanthropic services.
Governance (G)
Governance refers to the systems and processes that guide the decision-making and oversight within a company. Good leadership is more than delegation. It includes aspects such as ethical business practices, board diversity, transparency, cybersecurity, and efforts to prevent corruption and conflicts of interest. Strong governance practices are essential for maintaining integrity, accountability, and trust, both internally and externally.
As mentioned in this blog, sustainability practices help lower costs, encourage employee growth, and attract stakeholders. An ESG report goes a step further by clarifying the specific ways in which a company takes intentional steps towards a better planet and those who inhabit it. Muraflex’s ESG action plan, for example, discusses the environmental benefits of our products and manufacturing practices (environmental), our collaborations with various charities and donations (social), and our internal strategies that maintain office morale (governance).
In this article, we’ll dive deeper into the reasons why ESG initiatives are evolving from an added bonus to a necessity in today’s ecological and business climate.
Setting Global Standards
One incentive for companies to do their best comes from matching their efforts with other organizations’ (within and outside of their industry). The prevalence of ESG reports encourages companies to publish one of their own, if only to keep up with the market. These standards also provide a common language and framework for businesses to measure and improve their impact on the world, fostering collaboration and driving positive change on a global scale.
Transparency
An ESG report outlines the exact steps taken towards sustainable approaches. It puts them into concrete visuals and presents them to the public. The report functions as a platform that explains and aids investors in decision-making. It also informs clients and prospective employees, familiarizing them with company values.
Quantifiable Data
While it’s easy to make vague claims, an ESG report provides numbers and solutions towards measurable goals. The quantifiable data on ESG reports allows companies to track progress, identify areas for improvement, and demonstrate substantial impact over time. This can include reduction of greenhouse gas emissions by a certain percentage, increasing the representation of women in leadership roles, and improving board diversity.
Keeping Corporations Accountable
The ESG report compels corporations to consider the world outside of themselves and their profits. Sustainability is more than a trend; it’s an urgent call to action. It encourages companies to go above and beyond in terms of helping the planet. ESG also helps identify gaps and shortcomings, prompting companies to take corrective action and continuously improve their practices. Ultimately, by holding corporations accountable, ESG drives greater transparency, trust, and sustainability in the global business landscape.
Whether you're a multinational corporation or a small business, integrating ESG considerations into your operations can have far-reaching benefits. Not only does it align your business with evolving societal expectations and regulatory requirements, but it also enhances resilience, drives innovation, and strengthens long-term value creation.
In conclusion, ESG is more than just a framework – it's a catalyst for positive change. By prioritizing environmental stewardship, social responsibility, and sound governance practices, companies can not only reverse environmental damage but also contribute to a more sustainable and equitable future for all.
You can have a look at our ESG action plan here.
