'GOOD ESG' IS GOOD BUSINESS
Why do your customers care about ESG now?
Due to climate breakdown, biodiversity loss, and water resource degradation, the planet is undergoing profound environmental changes. Issues on the use of unethical labour in international supply chains, data privacy and human rights issues continue to dog global society. Many companies’ business ethics, competitive behaviour and regulatory management leave room for improvement.
The business world is in dire need of improving the ethics and sustainably of its operations. For businesses to succeed in the 2020s and beyond, they will increasingly need to address critical environmental, social and governance business risks.
Investors, regulators, staff, and customers worldwide are increasingly incentivising companies to report on and then reduce their ESG risk in exchange for benefits impacting their bottom line. These benefits include to name a few;
Greater capital access
Decreased fines from empowered jurisdictions
Attracting and retaining quality skilled staff
Acquiring and engaging higher value customers
To realise these benefits, companies will increasingly report their ESG performance against converging standardised ESG frameworks. Examples of these converging ESG frameworks include;
The ISSB (an offshoot of the IFRS formed at the UN’s COP26 event in November 2021)
The SEC's disclosures
The EU’s ESRS
In addition, more jurisdictions will start legislating ESG reporting against these leading standards frameworks as mandatory. The direction of travel will be top-down, starting with large public companies and moving down to smaller, private entities.
Over the coming years, your customers will focus more on improving their ESG reporting and performance.
Stakeholders will incentivise companies to buy from suppliers that can reduce their business' ESG risk.