The Importance of ESG
ESG (Environmental, Social, and Governance) refers to factors measuring the sustainability and ethical impact of an investment in a business. ESG focuses on money, good business practices, increasing EBITDA, and of course, increasing the value of companies. It is a way for businesses to focus on the bigger picture of caring for people and the planet instead of just the businesses’ financial goals. ESG should not be scary to your business. Companies have started to implement ESG initiatives, and it comes down to how you communicate and package it to everyone in your company. At VION, we understand the importance of ESG and how it can help our company and the society around us.
ESG has a more fundamental responsibility to society and reaches beyond profit. Companies promoting all three aspects of ESG positively impact the community, and there is proof. Businesses and individuals experienced this during the COVID-19 pandemic. The only option many people had was to work together as a community to get through difficult times. Employers realizing we were in this together modified rules and guidelines in place for decades obviously for their survival, but also for the benefit of the employee. Employees being able to work from home removed impediments to those without cars, reliable transportation or childcare. The eligible workforce for many jobs grew immensely and cut across all ethnic and socioeconomic norms. Indeed, the great migration by employees is further evidence of the phenomenon. Is this ESG? Yes! The environment benefits immensely from work at home. Socially many who were excluded from the workforce were now eligible and due to no commute could have improved home lives. Was governance negatively impacted? Perhaps, but new technologies are coming online to help in that regard.
There are multiple different ways businesses can start ESG initiatives, and it is up to the business leaders and their employees to determine the best way to implement them. Here at VION, we recently created an internal survey asking everyone different questions to help us improve our relationships with them ensuring everyone feels comfortable. Whether focusing on social factors within your company, confirming your company is helping the environment, or dealing with governance issues, taking the first step is the most difficult. Once your company starts, the end goal often seems easier to achieve. If you feel your company needs help, you can hire advisors to come in and work with you and your team.
Businesses may be worried about ESG risks such as cost. Another may be lost focus on the company’s core business. However, there are many more opportunities associated with ESG than risks. Top-line growth, cost reduction, reduced regulatory and legal interventions, employee uplift, and investment/asset optimization are significant opportunities your company should consider when implementing ESG. While ESG may be a long-term investment for your company, it should be a core competence and not be in the background.
Many companies have not yet implemented a plan for ESG initiatives. The best way to go about these initiatives differs for each company. However, the responsibility to establish them for the benefit of the business, its employees, and the community is important. VION understands the benefits of ESG, and we are consistently working to promote social good. ESG is a long play, but is an essential investment in the company’s and society’s wealth.