Why ESG is so important for commercial success

Published 14/05/2021
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In order to preserve and enhance value it is critical for forward thinking companies to build in Environment Social and Governance (ESG) criteria into all aspects of operations. With increasing demands from consumers coupled with government requirements primarily driven by climate transition and social inclusion it is critical for companies to incorporate a framework so that outcomes can be measured.
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With increasing climate, consumer, regulatory and investor pressures what should companies be focused on to have an impact?

Accelerate the response to climate transition

Sustainability focused companies need to have strong market acceptable solutions for mitigating climate risk. This is critical for retaining and capturing new customers as well as identifying other growth opportunities. This includes incorporating clean energy, sustainable transport, waste and materials and other solutions into the supply chain, production and delivery of products and services. Companies can reduce emissions and environmental impact by choice of energy supplier and through energy efficiency efforts. They can engage in responsible waste management, sustainable packaging and delivery of products. Food companies can incorporate sustainability into the food value chain from farm to fork. All companies can support forests, water, biodiversity and can directly and indirectly manage resources sustainably through a climate programme.

Support inclusive growth

Companies need to manage all stakeholders including their suppliers, workers and customers. Those that drive inclusion in the underserved, whether to improve work conditions, healthcare access, access to education, affordable nutrition, financial inclusion or community investment will be well positioned for future growth in this ‘need to have’ category. Companies have a powerful role in advancing opportunity for all stakeholders from supply chain management through to ultimate client. They can support access to education outcomes and help to close opportunity gaps in their local and connected community. Providing affordable benefits including health care, child care support and other support programmes for workers will strengthen stakeholder loyalty.

Promote strong governance

Companies need to put in place best practices in governance, ethics, diversity and inclusion with an overall focus on delivering on climate and social goals. Supporting progressive governance and best practice standards across management, employee, shareholder and other stakeholders is key. A strong governance regime will keep goals on track, identify issues and prevent negative operational impacts sooner.

Depending on the audience, acronyms such as ESG, CSR and UN SDG are not well understood or can quickly lose their meaning and impact due to the complexity of what is ‘under the hood’. At Planet Arborist we align our rating closely with the ESG standard and with UN sustainability goals. These are well respected standards. However, for clarity and impact we have developed our own rating categories which allows us to simply quantify whether a company is making an impact in specific area. We rate across all sectors and work to promote best practice within and across sectors. By focusing on social inclusion and sustainability we can achieve better stakeholder outcomes and reduce CO2e emissions, preserve water and promote biodiversity.

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About The Author

At Planet Arborist we identify and support investment into companies accelerating climate, health and inclusive outcomes. We identify sustainability focused companies with solutions for mitigating climate risk in many areas including clean energy, sustainable transport, food and agriculture, waste and materials, and ecosystem services. We also work with companies that drive inclusion whether to improve work conditions, healthcare access, affordability of education and nutrition, financial inclusion or community investment.