Are you looking for the best ways to make your company more sustainable on the market? The drive to achieve greater sustainability is gaining momentum, and no one wants to be left behind. Investors are now targeting only mutual funds and index funds that are focused on sustainability, while the community does not want to be associated with a firm using unethical practices. Even the capital /equity markets, investment holdings and governments are now crafting policies to help drive ESG sustainability at the local and global levels.
So, what ESG practices should you adopt as a company to fit in the fast-transforming markets? This post is a comprehensive guide outlining the five most important ESG practices that you should use.
ESG, the shortening for environmental, social, and governance, represent the criteria used to gauge a company's focus on sustainability. It outlines the three core areas of interest, demonstrating that sustainability does not stop with environmental matters. In addition to focusing on the environmental, social, and governance impacts, the criteria also require managers to highlight how they have been affected. Was your company’s performance impacted negatively by the sustainable practices or application of ESG activities?
As we are going to see shortly, ESG sustainability requires you to ultimately publish a report that stakeholders can see and make the decision on whether to work with you. So, any negative impact, perhaps a rise in the cost of operations or challenges in getting raw materials because of the focus on ESG, should be captured accurately. Note that ESG is not a specific point or impact but a process that helps companies to get a better MSCI rating and keep moving on from one level to another.
Check out the following sustainability practices that your company should consider for a higher ESG score and other benefits.
One of the major challenges facing the planet today is global warming. The problem has continued to intensify over the last about 100 years, and we are getting to the tipping point. Now, we have to take urgent action to reverse the problem of global warming, and the most important step is cutting down greenhouse gas emissions or reducing our carbon footprint.
The carbon footprint is the total amount of greenhouse gases that a company emits into the atmosphere. Reducing these emissions means that your company makes significant strides in clearing away the gases that cause global warming and climate change. You can achieve this by first calculating the current carbon footprint and setting a plan to achieve carbon-neutral status. Some of the actions that can help to reduce carbon footprint include:
One thing we must emphasise about sustainability is that for stakeholders like investors, the management of ETFs such as iShares and customers to appreciate the efforts made by companies, they want to see a clear plan. This means that if you start activities aimed at making a company green but do not have a plan for it, the effort will be labelled greenwashing. Therefore, you need a comprehensive plan and accurately report every step and impact.
ESG reporting should start with a comprehensive company review to determine the main opportunities and risks for your company. You should also involve the main stakeholders to determine the best reporting topics. Then, craft a clear strategy for enhancing sustainability in your company. Finally, track the results and report accurately so that investors, index or ETF fund managers and other interested parties can read to appreciate the efforts.
One fact about the challenges facing the planet today is that they cut across administrative boundaries. If it is global warming, emissions from a company in Singapore or China would also impact people in other countries and the entire globe. Therefore, a single company's efforts might not have so many implications compared to when working alongside other enterprises.
Reaching out to other companies in your supply chain is one of the best ESG practices because the collective impact will be huge. So, revisit the contracts and partnership deals with different companies and include sustainability requirements. For example, you can ask for comprehensive plans for cutting emissions as a pre-requirement for partnership with suppliers.
Apart from what you do within your company, it is also important to extend reach and support initiatives that are focused on sustainability. The idea is to look at an area of interest or focus on an aspect that will have a huge impact on the environment, society, or governance. One of these is supporting communities helping with forest and lost habitat regeneration.
You might also want to support communities impacted by war and famine in different countries. Support for new initiatives on social justice and economic empowerment in different communities can also come in handy. For example, supporting access to education and healthcare services might go a long way in reducing suffering in selected communities. Social activities are very effective in winning the support of investing professionals or funds.
We must indicate that all ESG practices require high levels of accuracy and commitment. To make your company’s stakeholders appreciate the efforts being put through, every piece of information should be accurately captured and reported. However, this can be challenging because there are different categories of data that should be reported, from production efficiency to financials. The best way to get it right is by working with the right sustainability management software.
The right app allows you to draw a strategy and stick to it for a higher ESG sustainability score. At Diginex.com, we have the best applications that you should use to drive sustainability in your company. The programs can help you to automate parts of data gathering, protect company information, and increase accuracy. Creating ESG reports and analysing progress of success for your sustainability plan will also be pretty easy.
Some of our best programs include diginexESG and diginexLUMEN. We also have the best ESG consultants ready to assist you to get every aspect of sustainability correct. No matter the size of your company, industry, or goals per year/month, we can help you to get the matters on sustainability right. Contact us now to learn more about ESG practices and enjoy all sustainability-related benefits.
The primary benefit of ESG accounting is that it helps to identify the risks and opportunities facing your company.
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