What is ESG all about?
The concept of considering Environmental, Social, Governance (ESG) factors in relation to business performance is not a new concept, but it is becoming more relevant and actual as ever to build resilient and successful businesses. New factors like climate change, lack of natural resources and ethical issues related to technological innovations are shaping new strategies and product development.
It is no longer an option to focus only on profitability and financial reports in a rapidly changing environment where clearly other issues are influencing business performance. The new approach is how to manage risks and secure stability in the long-term by integrating other relevant metrics and data such as ESG.
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66% of global responders are willing to pay more for products and services that come from companies that are committed to creating positive social and environmental impact (Nielsen, 2015). According to the recent Edelman Trust Index report, 50% of belief-driven customers choose, avoid or boycott a brand based on its stance on societal issues.
Responsible investing constitutes a major force on the financial markets. This approach aims to incorporate environmental, social and governance (ESG) factors into investment decisions to better manage risk and generate sustainable returns in long-term. (Principles for Responsible Investment) This can be seen as ESG integration, negative screening, impact investing or other forms.
Innovators should prepare to provide more diverse information on their impact as a company and about the production and use of their products / services. No matter if we are looking for the Paris 2020 Climate-agreement or the Sustainable Development Goals defined by United Nation all targets are implemented into national policies which results in changes in regulations and become game-changers for business to meet requirements.