Often associated with a company’s potential investors, ESG reaches far beyond that and impacts almost every aspect of your business. But what exactly is ESG and why should you even care?
What Is ESG
ESG stands for environmental, social, and governance and is a set of practices that a company has in place in regard to performance in those areas. Here’s a more details breakdown:
Environmental
This aspect involves, you guessed it, how your company measures its impact on the environment. It includes energy usage, greenhouse gas emissions, water usage, Pollution, waste management, materials, and encroachment on sensitive ecosystems.
Social
This one is all about the business’s relationship to people, both internal and external. It might include donating to worthy causes, what companies it chooses to partner with, how well employees are looked after in regard to their health and safety, and other ethical issues.
(Corporate) Governance
The final piece of the pie is all about transparency, accuracy, and legitimacy. It could include leadership diversity and accountability, clear and transparent funding and accounting, and engagement in illegal activity (or activities that straddle the line).
Why Should You Care About Your ESG?
As we mentioned before, if you’re hoping to get investors on board then you will definitely want to get these things in order as they will be looking into them! However, ESGs impact stretches far beyond just attracting investors.
It Attracts Talent
The days of showing up to work, completing your task, and collecting a pay cheque are over. People want fulfillment in the thing they commit 40 hours a week to and aren’t just living for the weekend anymore. Having strong environmental, social, and governance practices in place will show potential hires exactly what your company values.
Now don’t get confused, pay has and will always be important, but the list of things people are looking for in a job doesn’t just include good money and benefits anymore.
It Encourages Commitment
The benefits don’t just end at the hiring stage either! It’s quite a simple concept and one that many businesses seem to forget: people will naturally work hard when they’re doing something they care about. When your team feels good about what they’re doing, you’ll get the best out of them.
It Can Free Up Your Time
When your business is starting to grow, one of the worst things you can do for it is getting stuck in the day-to-day grind. You’re the business owner, the leader, the captain. If your entire day is filled with micro decisions, when on earth will you have time to steer the ship and chart a path forward?
Strong ESGs allow for other leaders in the company to make decisions, because they have confidence that it reflects the values and direction of the company you started.
Watch Out For “Faux”lantropy
One final word of warning: people can smell fakes a mile away. If you aren’t honest and genuine in your approach to ESGs, it might do more harm than good.
Don’t just donate 10% to a charity because “you’re supposed to”. Find causes and practices that align with the things you actually care about, because that authenticity will reflect in the work you put into it.
Want to learn more about this subject? You won’t want to miss the latest episode of The Business That Matters Spotlight!
This week’s episode welcomes passionate humanitarian, author, and founder of UGO Impact, Jill Valentine. Join Warren as he speaks with Jill about how entrepreneurs are making a difference and why you might not need to wait until you’re larger to do so. They also discuss why it’s so important to think deeply about the choices your business will make when it comes to charity and giving back. “Good intentions are often not enough when you’re potentially impacting people’s lives!”
