There’s a growing movement emerging within socially responsible companies at a time when the world is faced with environmental crises, inequality, and economic disparities. Enter ESG: Environmental, Social, and Governance.
ESG criteria play a pivotal role in shaping how companies are evaluated. ”Five ways that ESG creates value” by McKinsey & Company highlights how ESG factors extend beyond financial performance by influencing decisions made by investors, stakeholders, and society at large. Decision-making is now greatly influenced by ESG factors, which compel firms to demonstrate their commitment toward a sustainable environment, social responsibility, and fairness in business practices.
Let’s take a deeper dive into each aspect of ESG:
1. Environmental: This is the environmental impact of a company. It includes things like CO2 emissions, consumption of resources, waste handling, and a shift toward renewable energy. Often, organizations follow eco-friendly practices, aim at reducing their carbon footprint, and take active measures for the mitigation of climate change.
2. Social: ESG’s societal dimension refers to how well an enterprise treats its society, including stakeholders. These include variables like culture and inclusion, health, social welfare, and human rights. To achieve such a culture, companies embrace social responsibility by fostering inclusion and promoting the local community while treating employees and suppliers with respect.
3. Governance: Governance refers to the system of rules, practices, and processes that control a company. This includes the makeup of the board, compensation of executives, openness of operations, and accountability. Good governance encourages ethical decisions, shields shareholders’ rights, and promotes long-term wealth creation.
Why is ESG important?
There are several reasons ESG has been growing in importance. Initially, there were a growing number of individuals who focused on ESG in making investment decisions. These investors believed that environmental, social, and corporate governance (ESG) issues influence the potential for high returns in the future.
According to the World Economic Forum, investments in sustainability are expected to exceed $53 Trillion globally by 2025. This demonstrates that ESG is no longer just a niche concept but has evolved into a mainstream investment approach. Consumers are also more aware of how their choices affect the environment and society. They tend to make purchases from companies that align with their value system and exert an influence in positive ways. Additionally, regulators are increasing strictures in ESG, and companies must meet those standards.
ESG within Actian
ESG is a critical component of our operations at Actian. Our focus on environmental sustainability has led us to explore how to continuously reduce our carbon footprint, optimize energy consumption, and promote eco-friendly initiatives. This is coupled with nurturing a workplace that accommodates diversity and upholds fairness in employment of every worker. Actian participates in several outreach programs that provide assistance to its surrounding community through volunteering initiatives.
ESG signifies an underlying change in how corporations are assessed and viewed. Stakeholders demand this understanding as well as implementation of ESG principles; it is our duty for a better tomorrow. At Actian, our focus is to make a tangible difference through our software solutions and responsible corporate behavior.