Understanding ESG

It is no secret that every business has an impact on the world around them. Whether it is on the environment itself, the society surrounding it or the way the company is run, these factors are more in the social consciousness than ever before. By being aware of these things, customers and investors alike can take them into account when considering having a contract with a business.

You can choose to look at small-scale things such as whether an office-based company uses energy-efficient lighting, or for bigger picture indicators such as offering jobs to the local community rather than bringing people in from other towns.

For 1300 of the largest businesses, reporting their climate-related financial information is now embedded in UK law. However, this responsibility does not have any legal standing for small businesses.

Data collection and analysis

Software is available on the market to help businesses collect and collate data regarding their ESG metrics. However, as with all data collation software, the reports will only be as accurate as the data being inputted.

It is important for your business to have a robust framework surrounding collecting ESG data. This will vary between businesses and industries, so make sure you double-check any mandated reporting before you finalise the parameters. It may be worth seeking professional advice to make sure you are on track.

Integrating ESG into business strategy

As your business grows, you should stay constantly aware of your ESG reports. They should form part of your planning for expansion or diversification.

By aligning your ESG reports and goals, you can start to drive longevity within your business. By having a ‘green’ reputation or by being known as a company that puts back into the community, you will find it easier to sustain repeat customers. Repeat customers also lead to a steady cash flow and profit, which is an indication of a successful business.

Reporting and transparency

One way to be accountable to both the local community and the global environment is to be transparent with your reports.

Being able to demonstrate your commitment to sustainability, community support and ethical governance will stand you in good stead for both investors and customers.

An easier way to do this would be to use your great practices to create social media content. This is a great way to reach a lot of potential customers quickly and efficiently. By spreading the word about ethical supply chains, for example, you are attracting customers who value the same things as your business.