E.S.G
ESG is an indicator and framework used to measure corporate sustainability – (E) Environmental, (S) Social, (G) Governance. Currently, governments and large companies around the world use this standard to measure whether suppliers and partners meet basic cooperation requirements. In order to win orders from high-quality international customers, it is a basic requirement for companies to use ESG standards as the direction of their company development.
What is ESG?
The ESG framework covers three major areas: environment, society and corporate governance. It aims to comprehensively control and avoid related risks, and actively integrate the concept of sustainability into daily operations for shared growth.
Environmental — Companies pay more attention to environmental protection
Whether the company pays attention to various environmental protection issues and implements them in all operational links to reduce the impact on the natural environment.
From a business perspective, saving energy goes hand in hand with reducing operating costs.
Social — people-oriented and connected to society
The so-called society is made up of different people. The meaning of “people-oriented” is to put people first in everything and consider and care about the needs of different groups.
In the workplace, companies should care about employee safety and health and ensure equal rights and diversity. More broadly, businesses should also have a positive impact on the communities in which they operate.
Companies that take these factors into account tend to build a more attractive company culture, which in turn helps reduce talent turnover and avoid related costs.
Corporate Governance — How to manage a company fairly and legally
Corporate governance, in simple terms, is about determining whether a company manages its business and makes decisions in a compliant, legal and ethical manner.
Basic principles such as business ethics, anti-corruption, and compliance with laws and regulations are closely related to the reputation of a company.
What’s important is that by establishing a rigorous risk management system and maintaining a good reputation, companies are more likely to gain the favor of investors, customers and suppliers, thereby helping the company’s development.
Perfect ESG planning can establish a positive brand image for a company and effectively increase its market share. Since the supply chains between business partners are interconnected, companies with similar ESG development directions will be able to reach similar target customers more easily and have greater opportunities for business cooperation.
The craze over ESG funds around the world has made the ESG concept a weapon for companies to strengthen investor confidence and attract investors in Hong Kong and even the global market. In recent years, under the guidance of the Hong Kong government, more and more investors have chosen different ESG investment funds to provide huge funds for companies with sustainable development prospects.
Decarbonisation is a key part of ESG, encouraging companies to reduce carbon emissions by tracking sources such as energy consumption, transportation emissions and raw material consumption. A McKinsey report pointed out that companies can effectively reduce operating costs by about 60% by implementing ESG policies. To some extent, ESG provides a framework for enterprises to refer to, enabling them to have more advanced green planning in energy management, and in the long run, it provides huge economic benefits for daily operating expenses.
Today’s new generation has received higher education than the previous generation and has been exposed to information from all over the world since childhood. They have a broader international perspective and are always concerned about social affairs. When they choose a job, they will take the company’s culture and brand image into consideration. ESG is one of the considerations for young talents, and it no longer depends solely on the amount of salary. Therefore, large companies with comprehensive plans at the ESG level have greater advantages in attracting young talents.
