Environmental, social and governance (ESG) concerns are common issues for companies to address today. They cover a wide range of issues and aim to improve the impact of business on the world. We show you what you need to pay attention to in your company in the future.
Text: Andrew Ball & Björn Leffler
Click here for the second part of the mini-series
Environmental, social and governance (ESG) concerns are now common issues that every company must address. They cover a wide range of issues and aim to improve the impact of business on the world. To successfully address these issues, it is important to know which items need to be changed. In addition, as a company, it is important to be able to demonstrate that the changes are actually having an impact. By working with M2, your company can ensure the success of its own ESG policy by both implementing and providing evidence of the jointly developed strategy.
What does ESG mean?
While the actual activity is what makes a company financially successful, the way business is done is now just as important, if not more so. The rise and constant presence of social media and companies like TikTok means that injustices can be addressed much more easily in the public eye. A poorly thought out business decision can cause customers or clients to turn their backs on a company - recent examples include Twitter and Balenciaga. Business practices that were acceptable in the past are not so acceptable today. Intolerance and prejudice against employees should be taboo. At the same time, companies should strive to minimize or positively impact the environment.
The approach that governments and companies are taking to these issues is referred to as ESG - Environmental, Social and Governance - with some of the structures and rules embodied in organizations such as the EU (Corporate Sustainability Due Diligence ). While the rules and guidelines define what needs to be done, it is up to the companies themselves to decide which aspects to implement and how to make the necessary changes.
To support the implementation of a successful ESG strategy, M2 has developed a framework that addresses the following issues:
Identifying industry-specific ESG issues
Identifying the most important business-specific issues for your company
Identifying gaps between reality and the ideal
Developing a plan to close the gaps
In addition, the framework is underpinned by robust ESG reporting
While what a company actually does is what makes it financially successful, how business is done is now just as important, if not more so. / © Photo: unsplash.com
What can meaningful ESG reporting look like?
ESG reporting is the process of tracking data and metrics related to the company's ESG policy, providing evidence of compliance with that policy and guidance for future business decisions. This reporting is critical to ensure that organizational changes made to comply with the established ESG policy are adhered to and add value to the business. ESG can be a costly issue, so a high return on investment creates a favorable environment for future change.
Some of the benefits of ESG reporting are listed here:
Increased attractiveness to employees
Increased attractiveness to investors
Evidence of regulatory compliance/avoidance of penalties
Improved customer retention/acquisition
The second part of our mini-series on ESG will focus on the definition of fixed standard KPIs and a sensible implementation concept for your ESG reporting.
Click here for the second part of the mini-series
Do you have any questions about this article or about ESG in general? Then please feel free to contact us at any time: esg@m2dot.com.
We look forward to the exchange with you.
Your M2 Team
Phone: +49 (0)30 20 89 87 010
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