A Detailed Guide to Corporate Environmental, Social and Governance Factors
When businesses invest in FinTech or explore strategies to manage their finances better, their ultimate goal is almost always to earn profits and enhance customer experience. But what if all companies also considered their collective responsibility towards the greater good and resolved to look beyond their four walls?
With rising awareness of social and environmental consciousness and the dire need for sustainability, Environmental, Social and Corporate Governance, or ESG, has gained considerable momentum. Essentially, ESG compliance means that a company or business reflects an awareness of the social, environmental, and governance factors that affect the world around. So, let’s take a closer look at what ESG is.
Environmental
With the ever-expanding population comes the urgent need to conserve resources for future generations and leave behind a liveable world. That’s why several organizations and consumers worldwide are realizing the significance of incorporating sustainability in their practices. A consideration of environmental factors may include (but isn’t limited to) the following initiatives:
- An effort to reduce carbon footprints or carbon emissions when manufacturing or supplying products
- A move to reduce water waste by monitoring water consumption by manufacturing units, employees, etc.
- A shift to renewable energy sources, such as solar and wind energy, at the workplace
- An initiative to avoid deforestation in business practices or plant more trees
- A resolve to avoid engagements with third parties that do not incorporate ESG practices or engage in environmentally harmful business processes
Social
The corporate world is firmly rooted to the social ecosystem around it, so every company has its share of social responsibility that needs to reflect in its business processes. Corporate social responsibility (CSR) has now become a household term in the corporate sector, with section 135 of the Companies Act requiring companies to spend at least 2% of their net profit in socially responsible initiatives:
- An objective to promote income equality across employees of all genders, races, communities, nationalities, sexual orientations, etc.
- An effort to hire female employees to match the ratio of male employees in the company
- An initiative to avoid socially harmful practices like child labour in business practices and boycott third parties engaging in such practices
- A commitment towards helping underprivileged communities through employee CSR programs, donations, etc.
- An active inclusion of such policies in the company objectives, vision and mission
Governance
The “G” in ESG stands for “governance,” which evaluates how a company conducts its business processes, allocates responsibilities to employees, managers, shareholders, third-party entities, etc. This aspect of ESG is particularly significant, because it integrates environmental and social factors.
- Anti-corruption measures in company policies and protocols
- An effort to prevent conflicts of interest and maintain absolute transparency in business
- An active initiative towards ethical competitive practices, including anti-collusion and anti-coercion
- Fair incentive and appraisal structures to promote employee growth and salaries commensurate with their key roles and responsibilities
Environmental, social and governance factors collectively make a huge difference in the national and global contexts, helping organizations contribute to the world around them and facilitate a fair, ethical work environment. We at Zuron are excited to announce that we are in the process of becoming ESG compliant, so that our business operations are aligned with creating a positive workforce and resolving environmental and social issues that majorly affect the world today. Help us in our journey towards facilitating a better existence, one step at a time.
