In today’s modern world, there’s more to running a business than profitability and hard-working employees. With holistic issues at the forefront of how companies conduct business and sustainability key in securing social and economic well-being, organisations are looking to a variety of factors to set them apart from others.

Environmental, Social and Governance (ESG) refers to factors that a business uses to measure their ethical standards. ESG encompasses a variety of issues and criteria under each termand businesses can use such standards to give themselves a competitive edge.

We’ll explore the considerations surrounding such policies and how companies can begin to implement them and create a holistic approach to running their business.

What are the ESG criteria?

The criteria can be considered separately under each relevantterm.  Environmental criteria include climate policies, energy usage, pollution and conservation, whilst social relates to aspects such as mental health, employee health and safety and diversity. Governance includes the logistics of a company and can refer to transparency, director and stakeholder appointments and onboarding, as well as the absence of illegal practices and conflict of interests.

This wide range of criteria should be considered for an overall view of a business’ growth potential and an ESG lawyer can support with the implementation of these policies, ensuring legalities are adhered to.

Using ESG for a competitive edge

There are a range of benefits to using competitive benchmarking within ESG including predicting business risk or opportunities and making comparisons across the industry. This also helps with identifying any gaps and assessing the success of sustainability protocols and policies.

How can ESG policies benefit your company?

Ethical and sustainable standards can create a hugely positive impact on your business. From expanding customer reach and unleashing greater opportunities for growth through awareness and positive reputation to reducing overall costs, the advantages are all-encompassing.

One poignant example of this is the negativity surrounding so-called ‘fast fashion’, where such businesses are highlighted for lack of ethical standards. These companies have likely suffered as customers looking to source products from fairerand more sustainable brands.

How can you implement and work on your ESG policies?

Rather than be daunted by the broad range of ESG criteria, you can start by working out where your business currently stands in terms of the policies. The next step is to identify the most vital areas that need ESG policies and budget resources accordingly. Strategies should be measurable and you should also allocate a timeframe in which to work towards.