What is ESG and why your company should start using it

As the demand for sustainability and corporate social responsibility grows, so does the importance of ESG. But what exactly is ESG, and why might it be relevant to your business? In this blog you will read how ESG can contribute to a stronger and more sustainable business.

ESG: the three pillars of sustainability

ESG stands for Environmental, Social, and Governance. Each explains an aspect of sustainability and ethics within business.

Pillar 1: Environmental

Refers to a company's ecological impact, such as carbon emissions, energy consumption and waste management. Companies with strong environmental policies often work to reduce their carbon footprint, which is not only good for the environment but can also lead to cost savings.

Pillar 2: Social

Social aspect within ESG emphasizes a company's responsibility to its employees, customers and the broader community. A company that scores high on social promotes issues such as inclusiveness, diversity and safe working conditions. Such a culture not only makes for engaged employees, but also strengthens ties with customers.

Pillar 3: Governance

Governance is all about ethical and transparent leadership. It includes issues such as shareholder rights, ethics in business operations and clear communication with stakeholders. Companies with strong governance inspire trust through fair and consistent decision-making.

Why companies are finding ESG increasingly important

There are three major reasons why companies worldwide are shifting their focus to ESG. First, consumers increasingly demand that companies act responsibly and do their part for a better world. Companies with an ESG strategy appear more trustworthy and often win the preference of customers who value sustainability.

In addition, increasing regulations play a major role. International organizations and governments are imposing increasingly stringent environmental, ethical and inclusion requirements. ESG helps companies meet these and be prepared for the future.

Finally, a strong ESG profile offers investment benefits. Investors and financial institutions pay more attention to companies' ESG scores because companies that operate responsibly are perceived as less risky and more stable. Thus, for companies, a high ESG profile can lead to better financing conditions and access to capital.

The effect of ESG on operations

Companies that invest in ESG typically build a stronger reputation, giving them a better position in the marketplace. Consumers and businesses prefer brands that treat society responsibly. In addition, a good ESG policy attracts talented employees. Employees want to feel connected to their company's values and value organizations that make a positive impact.

Companies with an ESG strategy often also realize cost savings. By optimizing processes and saving energy, operational costs can be reduced. Thus, ESG not only provides social benefits, but also contributes directly to an organization's profitability.

ESG and the role of technology

Technology is a key driver of ESG. Digitization and data analytics help companies measure their environmental impact and make business processes more sustainable. Many organizations rely on technology to achieve ESG goals and make progress transparent. Consider data analytics software that measures energy consumption and emissions. This allows companies to identify areas for improvement and reduce their environmental footprint.

Technology also plays an important role in governance. Digital platforms provide opportunities for reporting and transparency. By sharing ESG performance openly, a company builds trust with customers and investors.

Examples of ESG in practice

Many companies are implementing ESG initiatives that not only improve operations but also increase their social impact. Here are some successful ESG practices:

• Environmentally friendly packaging: Companies are switching to recyclable and compostable packaging to reduce their waste.

• Inclusive workplaces: Companies invest in diversity programs to create a healthy and equal work culture.

• Transparent operations: Organizations develop codes of conduct and improve communication with stakeholders to build trust.

These examples show that ESG is not only feasible, but can also contribute to better business and reputation.

How can your company get started with ESG?

Want to integrate ESG into your organization? Below is a roadmap to build a solid ESG strategy that fits your business:

Define relevant ESG objectives

Choose which ESG elements align with your company's mission and values. For example, environmentally friendly measures are important for manufacturing companies, while inclusiveness and diversity are more important for companies with a large workforce.

Create measurable KPIs

Set goals that are achievable and measurable. Consider a specific reduction in carbon emissions or a concrete plan for diversity growth. Measurable goals give direction and provide clarity.

Engage stakeholders

ESG is about making an impact, so it is important that employees, customers and suppliers are involved in the plans. This promotes support and can provide valuable insights.

Use technology to monitor progress

Use digital tools to track ESG data. This makes it easier to track progress and make timely adjustments.

Communicate your results

Transparency builds trust. Share ESG progress with both internal and external stakeholders to increase engagement and make your social commitment visible.

How NFC World can strengthen your ESG goals

Technology is a key to ESG success, and NFC provides an excellent solution here. Our NFC business cards replace traditional paper cards and contribute to a more sustainable world by reducing paper consumption. Our dashboard also provides insight into contact information and network efforts, which increases efficiency and helps your company make more conscious choices. Want to prepare your business for a more sustainable future? Then explore the possibilities of our digital business cards and strengthen your ESG ambitions.