Over the past few years, ESG has become a key focus in investing circles. Discover these successful ESG cases and build the best ESG strategy for your company.
Your business, like every company, is deeply intertwined with environmental, social, and governance concerns, which means a strong ESG proposition has the power to create value — in a multitude of ways. It allows businesses to attract high-value investors, increase social credibility, build customer loyalty, improve financial performance, create a purpose that encourages employee productivity and make business operations more sustainable.
During the past few years, the interest in ESG issues spiked: Consumers are demanding high standards of sustainability and employment quality regulators need the corporate sector to tackle social problems and investors started fully considering ESG scores.
What is ESG?
The term officially originated in 2004 with the publication of the UN Global Compact Initiative’s “Who Cares Wins” report and it stands for Environmental, Social and Governance activities.
These are non-financial factors investors use to measure a company’s stance on socioeconomic factors and its sustainability efforts before investing.
Let’s take a look at each one of the factors:
- Environmental factors involve preserving nature and resources, like carbon emissions, air and water pollution, deforestation, green energy initiatives and others.
- Social factors look at how a company treats people both inside and outside the company. That includes customer satisfaction, company sexual harassment policies and employee diversity.
- Governance factors consider how a company is run, which involves political contributions, executive pay, large-scale lawsuits, internal corruption, lobbying and others.
How is a strong ESG proposition directly linked to value?
Top-line growth
Attracting B2B and B2C customers with more sustainable products and earning better access to resources via stronger community and government relations.
Cost reductions
Lowering energy consumption and reducing water intake.
Employee motivation
Creating a strong and solid purpose boosts employee motivation and consequently, productivity.
Social credibility
High social status and acceptance, loyal customer base and organic talent attraction through credibility.
Investment and asset optimization
Enhancing investment returns by better allocating capital for the long term. Avoiding investments that might not pay off.
5 ESG successful cases to inspire your ESG strategy
Over the past few years, the idea of ESG has evolved dramatically. Environmental, Social, and Governance principles no longer belong to the undefined domain of buzz words but instead play a key role in investing circles.
Since the pandemic, ESG investing has had a significant expansion around the world, as organizations and individuals increasingly recognize the interdependencies between social, environmental, and economic issues.
That happened mostly due to market disruption and uncertainty caused by COVID-19, which led many investors to turn to ESG funds for improved resilience. Data from Bloomberg Intelligence indicates that global ESG assets are expected to exceed a colossal $50 trillion by 2025.
1. Microsoft
This trillion-dollar company has been heavily ESG-driven. In 2019, Microsoft got its highest recognition for ESG practices with a focus on sustainability.
Microsoft also bagged the number 1 position on the list that ranks companies based on their commitment to providing benefits and development programs for the betterment of the employees. The company is committed to having a sustainable impact worldwide. Microsoft Brazil implemented a new marketing strategy mapping suppliers into 4 subcategories of sustainable initiatives. The goal is to be sustainable from end to end.
2. Accenture
This huge organization has set the goal to achieve net-zero emissions by 2025. Their main practices involve reusing and recycling all of their e-waste and ensuring a reduction in water usage through their work with clients and ecosystem partners.
Since the company started its environmental journey in 2007, it has saved 2.43 million megawatt hours of electricity, more than 1.22 million metric tons of CO2, and generated more than US$326 million in energy savings.
3. Xylem
For years now, Xylem has aimed to bring worldwide access to sustainable, clean, and affordable water to more people around the world without damaging the environment.
With the tagline “Let’s Solve Water”, the company has been efficiently battling water scarcity by creating a more water-secure world for future generations.
In 2020, Xylem received numerous recognitions for their sustainability efforts such as an AAA ESG rating from MSCI. Top Sustainalytics score for the Industrial Machinery Industry, Barron’s Most Sustainable Companies, and many others.
4. NVIDIA Corporation
GPU company NVIDIA Corporation is fighting climate change with technology and innovation. A digital version of our planet + Omniverse technologies will predict weather changes and their effects over the decades.
The company will also be used to power the Department of Energy’s supercomputer “Kestrel” dedicated to advanced energy solutions and cutting carbon emissions. In 2014, NVIDIA started asking its manufacturing suppliers to report their greenhouse gas (GHQ) emissions.
5. Pepsico
In January last year, Pepsico announced that it plans to achieve net-zero greenhouse gas emissions across its supply chain by 2040.
The company also shared in its latest ESG report that it’s working to promote regenerative agricultural practices, which make soil healthier and reduce carbon from the environment. In 2021, the company applied these agricultural practices to 345,000 acres.
Pepsi has also set an ambitious goal of making 100% of its packaging recyclable, compostable, biodegradable or reusable.
Do you apply any of these practices in your organization?
Connect with Iliana to discuss essential solutions that can help you go further and create a strong ESG strategy for your business.
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