Are you knowledgeable about the ESG? If not, then in this post, you will learn about it. ESG stands for environmental, social, and governance. It is very popular nowadays. But most people are unaware of what it is and why investors want to put their money in businesses that ranking great in ESG factors? What are the surprising perks of ESG investing?
What Do You Mean By ESG Investing?
The ESG is to use your money and invest it in those companies whose business operations are in line with your companies values. ESG solutions investing filtering those companies with business operations that you don’t want to support. The investors disinclined those companies which not meet their ESG requirements because they did not get enough rate of interest on their investments. Due to the effects of the COVID-19, ESG investing became so popular and gained more traction.
To know deeply about ESG investing, here is what every ESG factors measures for;
These factors include how a companies impact the environment both globally and locally. It has companies’ use of energy sources, its waste management program, and how they work and handle the problems of pollution arising from their business—deforestation and climate change issues. The company uses the energy effectively or not. If companies follow these things, they get higher profits on their investments.
Social factors include how the organization treats its employees and other people who have worked or not. Here are some examples:
- What is the pay scale of the employees, and is it is according to their work or not? What are the retirement plans, and does the company contribute to them or not?
- In addition to the basic salary, what are the other benefits employees get? Is the company provides a free lunch to the workers or not?
- Sexual harassment is also considered.
- What are the plans of employment training and education programs? Flexibility in working hours or not?
This factor includes how the board of directors manages the company and focuses on corporate policies. It is totally about making the rights, expectations, responsibilities of stakeholders clear. With the help of this, interests are met, and a company gets the long-term strategy. Here are some examples of this factor is :
- Executive repayment
- Saving shareholder interests
- Tax strategy
- Corruption and bribery
- Corporate risk management
Benefits of ESG
There are various perks for companies to invest in implementing and developing powerful ESG strategies. Strong ESG solutions help to create excellent business value across the organization.
- Environmental sustainable organizations attract more customers and allow better access to resources, lower water, and energy consumption, and reduce the business’s operational costs.
- Social sustainable organizations lead to bigger social credibility, increase employee morale, make stronger community leaders and attract talent.
- Governance sustainable organizations may lead to government subsidies, support, better investor relations, overcoming enhanced regulatory burden in the form of the loan conditions.
Now, you know the importance of ESG investing for companies. If you are looking for the ESG company analysis, you can contact the communique. We are the team of ESG specialists who will do your organization’s strategies in the best way. If you want to know more about it, go to our official website now!