Introduction to ESG Standards

Today, sustainability is the focus, even for organizations that until not so long ago were exclusively profit-oriented. Now this main purpose has not changed, but many other goals have been added to the agenda of companies, which are currently making a considerable effort to comply with ESG standards.

ESG is a framework for sustainability composed of three main areas: the Environment (Environment), the Social (Social) and the Corporate Management (Governance).

Joining projects in these areas can mean implementing transparency and ethical practices in the company, making environmentally friendly choices, taking a stand on social issues and more. Observance of this type of practice has spread significantly over the past decade, due to the spread of greater awareness of the social and environmental impacts of business activity, which has educated the public and trained knowledgeable consumers and investors.

This path has not been easy, as transformation processes toward Sustainability can be quite costly and can never be considered truly “completed,” meaning that they must be fueled by continuous effort to achieve ever better results.

Reason being that it is mostly large enterprises, those with the most capital at their disposal, that have taken the lead in sustainable development. However, even smaller companies can develop sustainable practices and benefit from them by taking advantage of their own advantages, such as the ability to build a closer and more personal relationship with customers and investors, and thus more easily show them the genuineness of their efforts in ESG areas. It must also be remembered that the pursuit of Sustainability goals does not imply the sacrifice of profitability goals.

A survey conducted last May by McKinsey & Company out of more than 1,100 respondents showed that the main reason leading companies in the ESG framework decide to address ESG issues is not, as one might expect, to comply with legislation, but rather to promote growth. The survey report goes on to expose many other benefits that organizations can gain by investing in these areas, such as the opportunity to attract and retain new talent, motivate workers, meet customer and investor expectations, and improve corporate reputation. In addition, more sustainable conduct often results in reduced waste of energy and materials, and can therefore significantly reduce a company’s production and operating expenses, avoiding regulatory penalties and perhaps qualifying it for government incentives. It is now clear that implementations and projects in ESG areas are no longer just obligations imposed on companies by industry rules and regulations, but rather a means of developing the entity and promoting its growth. This epiphany has led many organizations to invest in sustainability in recent years, creating a new reality in which even the largest and most profitable companies take responsibility for their own conduct and help shape a better future.

Sitography

https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/esg-mom entum-seven-reported-traits-that-set-organizations-apart#/

https://www.esg360.it/esg-smart-data/promote-growth-aspettative-dei-clienti-e-compliance-m ckinsey-analyze-the-relationship-between-business-and-esg/

https://www.techtarget.com/whatis/feature/5-ESG-benefits-for-businesses