Roger McKerlie, Founder and CEO of Xeed ESG sheds light on what SMEs and mid corporates need to know about an environmental, social and governance (ESG) approach and how it can lead to differentiation, resilience and increased value.
What is ESG?
Business leaders get what ESG stands for and broadly how it can have a positive or negative impact in society, but they often miss an essential point that ESG and sustainability are all interconnected. The British Business Bank has a succinct definition:
“ESG is a collective term for a business’s impact on the environment and society as well as how robust and transparent its governance is in terms of company leadership, executive pay, audits, internal controls, and shareholder rights. It measures how your business integrates environmental, social, and governance practices into operations, as well as your business model, its impact, and its sustainability.”
Why should businesses embrace it?
At Xeed ESG we work collaboratively with entrepreneurs to explain why they should take responsibility and embrace ESG. It’s destined to become an integral part of every enterprise’s DNA, yet the ever-growing wave of legislation and investor demands pose daily challenges.
There’s little or no doubt that a responsible business will outperform one that is reckless and pays no regard to its environmental footprint and impact. By incorporating ESG practices, businesses can differentiate their brand, gain a competitive edge and showcase their commitment to sustainable operations within their sector. So how can you start tackling these issues?
Begin by reviewing the landscape you operate in with an ESG lens – the market, your customers, suppliers, current and potential employees, your bank, investors and even your competitors. By appreciating stakeholder challenges and the degree to which sustainability is important to them, you can begin to build an appropriate ESG strategy relevant for your business.
Why implement an ESG strategy?
There is a growing body of evidence that shows how implementing an ESG strategy can add significant value to your bottom line while mitigating potential risks. For example if your business is in the supply chain (directly and even indirectly) of a large corporate the way you operate will change, if it hasn’t already.
Already, large corporates with significant investors are coming under huge pressure to change with a particular emphasis on reducing greenhouse gas emissions. As much as 40-80% of these can come from their supply chain and they will come knocking on your door with requests for emissions data and plans on how your business is going to help reduce them. If you can’t march to their ESG tune, you risk losing their custom.
What next?
Deploying an ESG approach is a responsible way to behave and it won’t damage your business. It’s a positive opportunity to identify and attract more impactful work. Whether you’re an entrepreneur or mid-corporate there are quick-win strategies to unlock business value.
