Environmental, Social, and Governance (ESG) is everywhere for a good reason. Today’s consumers, investors, and workers - are demanding organizations to assess, evaluate, and implement measures relating to sustainability and ethics - or more simply stated - what’s good for mankind and our earth. So what’s the E in ESG really about?
We’re talking about the environment in accordance with ESG principles, the actual physical environment – the natural world that we live in and depend on for our survival. For the E in ESG, the environment can be further broken into three broad categories: climate change, resource depletion, and pollution. Many times, these factors work in unison, often compounding their effects.
What Does it Mean to be Environmentally Conscious?
For organizations seeking to embrace the E in ESG, it should mean the following:
- Devising and implementing broad-based initiatives that truly drive action on climate change for generating positive environmental outcomes for all.
- Effectively managing environmental risks, including climate-related risks, by implementing proven measures for minimizing one’s carbon footprint on the planet.
- Minimizing, to the greatest degree possible, one’s environmental impact on all physical operations.
- Strategically partnering with organizations for helping advance environmental sustainability.
Simply stated, organizations that fail to consider the effects of their policies and practices on the environment may be exposed to greater financial risk, ultimately leading to governmental or regulatory sanctions, criminal prosecution, and reputational damage, all of which risk harming shareholder value.
Of the three in ESG - Environmental, Social, and Governance - the E is arguably the one that really counts. Why? If we can’t protect the good earth given to us, what else really matters in the world? In the World Economic Forum's Risk Reports, the top five perceived risks by experts are all environmental risks, with climate-related risks topping the list in 2022.