ESG – Mind the G!

Sep 23, 2021

The investor perspective is increasingly to consider business models from an Environmental, Social and Governance (ESG) perspective. You could argue that getting the G right enables the E and S to thrive.

Switching from inorganic to organic cotton might tick an environmental box.

It would fail on the social and governance aspects if it was produced using slave labour and transported by air. Environmental issues tend to hog the limelight when it comes to sustainability. The investor perspective is increasingly to consider business models from an Environmental, Social and Governance (ESG) perspective. You could argue that getting the G right enables the E and S to thrive.

When you consider sustainability from a governance perspective, it is just good business.

Understand your value chain, identify your major impacts and the associated risks. Consider your market, product and service opportunities and competitive position. Then apply a few scenarios – climate change in particular, but also business model perspectives such as the impact of zero carbon alternatives to your offering, or loss of employees to more sustainable competitors.

So think about your board or leadership team. If funding will start to rely on your ESG credentials, and regulation drives climate change adaptations, how knowledgable are the key players who will choose your path?

This is an increasing risk for many businesses. A study by New York University’s Stern Centre found from 1,188 Fortune 100 Directors: 6% had relevant environment experience, 0.2% had specific climate expertise. Mind the knowledge gap!

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