Importance of ESG


13 Feb


A lot of changes have taken place in the investment market, as there is a lot of focus today on the environment and human rights.  A lot of attention today is being given to environmental conservation, and this is why investors of today choose companies that take measures to mitigate the effect they have on the environment.  Fair compensation, employee welfare, and gender equality are also factors that investors today are looking at.  Investors today not only analyze financial factors, but also non-financial ones.  Companies today are therefore encouraged to take measures that leave the world better than they found it.  For a company to be successful today, it has to pay attention to ESG issues.  The acronym ESG simply means environmental, social, and governance. ESG is a topic that needs more attention, seeing as many corporate executives do not know what it entails.  Every company in operation today needs to pay attention to ESG issues to manage risk exposure, since social norms are constantly changing, and focus today is on ESG. Discussed in this article are some of the reasons why ESG should be a top priority topic in the business world today.


Environmental issues are the first aspect of ESG.  The environmental factor is vital because many executives d not realize the impact their companies’ actions have on the environment. Decisions to protect and clean up the environment need to be made at the strategic level if a firm wants to be progressive. Discover more facts about investment at http://www.ehow.com/how_4854285_become-an-investor.html


Social issues are the second pillar of ESG.  Social risks need to be mitigated if a firm wants to be in operation for a long time.  A firm that wants to be progressive needs to look into issues to do with gender equality, labor relations, leadership techniques, and health and safety at the workplace. Be sure to explore here!


Thirdly, we have governance.  Governance concerns itself with the running of a company at ESG-Central.com.  Here, executives’ pay and bonuses are examined in relation to those of employees.


One major benefit of ESG is that it makes capital cheaper. A lot of executives today believe that ESG is expensive, but this is not the case.  Companies with high ESG scores borrow at a lower rate than those with poor ESG scores, and this is why you find hem performing better. 


ESG knowledge is also vital for a firm because it adds on to its human capital. This is because ESG has to do with factors such as employee welfare and gender equality.  The way you treat your employees will determine how they treat your company in return.  Companies that invest in their employees’ welfare perform better than those that do not because employees who are treated well are more motivated towards accomplishing company objectives than those that are not.

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