The ESG concept assumes that the company’s goal should be more than just personal economic interest. The business should bring wide benefits to all stakeholders, the local community and the environment. Only in this way can the company ensure sustainability and stability for itself and the environment in which it operates.
Let us recall that ESG refers to three elements: environment, society and management. These are non-financial factors that are used by investors to assess investments and the stability of the company. Environmental factors refer to the natural world, social factors analyze the way the company treats people inside and outside the organization, while management factors look at the way the company is run.
Just a few years ago, questions like – „Is this car harmful to the environment?” – were not important. Currently, the growing popularity of electric cars (which cost much more) shows that we are no longer indifferent to environmental issues. Meeting the ESG criteria proves the quality of the business. High quality, in turn, has an impact on the image, the competitive advantage of the company and customer loyalty. The company’s responsibility is related to the financial performance and, consequently, the ROI for investors.
The ESG criteria should be considered as part of the company’s strategy. It is clear that this is a macro trend that is spreading very quickly. Investors are now taking decisions based on actual actions, not only the declarations of the company.
Enterprises are accountable for achieving goals that focus on environmental protection, social responsibility or corporate governance.
This trend is progressing due to business rationality. Therefore, an intelligent and responsible investor should not treat ESG as a temporary trend.