Let’s focus on the “E” of ESG (Environment, Sustainability, Governance), and explore why it has become a critical component for businesses and investors alike.
The environmental component of ESG encompasses how a company interacts with the natural world. It involves assessing a company’s energy use, waste management, pollution control, natural resource conservation, and efforts to mitigate climate change. In essence, it looks at how a company’s operations affect the planet and how it manages its environmental risks and responsibilities. Is the company taking Green Action?
One of the key drivers behind the increasing focus on the ‘E’ in ESG is climate change. As the effects of global warming become more pronounced, there is growing pressure on businesses to reduce their carbon footprints. Companies are now expected to take Green Action such as using renewable energy, increasing energy efficiency, and reducing greenhouse gas emissions. This also often leads to cost savings and operational efficiencies.
Another factor to think about is resource management. This involves the sustainable use of natural resources such as water, minerals, and forests. Companies in industries like fashion, agriculture, and technology are increasingly scrutinized for their water usage and sourcing practices. Efficient use of resources not only preserves the environment but also secures long-term operational stability for businesses.
Waste management is another significant part of the environmental pillar. Companies are expected to minimize waste, recycle materials, and manage their products’ lifecycle responsibly. This can involve reducing plastic use, ensuring proper disposal of hazardous materials, or creating products that are easier to recycle or upcycle.
Investors are paying close attention to how companies address these environmental concerns. Those that actively manage their environmental impact are often seen as less risky and more forward-thinking. This perception can make them more attractive to investors who are increasingly factoring ESG criteria into their decision-making.
In summary, the “E” in ESG is about how companies interact with the environment and what Green Action they take to mitigate their impact. By focusing on sustainability, resource management, and Green Action, companies not only contribute positively to the planet but also position themselves for long-term success in an increasingly eco-conscious world.
It is every company’s ethical and economical responsibility, regardless of size or current eco footprint to take Green Action and to be transparent about your company’s efforts. To be a Green Action leader is to challenge the current status quo in regards to the “E” in ESG, and be resourceful and relentless in doing so.
Picture from American Public Power Association on Unsplash
