With a flux in regulations, businesses are urged to become more sustainable. In doing so, many find that adopting ESG practices enables them to have a lower impact on the planet while also performing better financially. Several studies have found positive correlations between diligent sustainability business practices and economic performance. This blog will look at how setting ESG goals can help businesses reduce costs and improve efficiency. It will also cover why ESG software is important for achieving these goals.
What is ESG?
ESG stands for Environmental, Social, and Governance. These are three areas used to measure how a business impacts the world.
- Environmental focuses on reducing carbon emissions and waste.
- Social looks at how companies treat their workers and communities.
- Governance is about making sure businesses are run fairly and transparently.
Why ESG is Important
More customers, investors, and governments, are paying attention to how companies operate. In fact, 76% of consumers say they will stop buying from companies that treat the environment, employees, or the community in which they operate poorly. It’s becoming clear that, as the world moves towards sustainability, businesses that embrace ESG practices are more likely to succeed. Another research from Kellogg and Harvard Business School shows that when companies share positive ESG news, like improving employee well-being or reducing their carbon footprint, their stock value can increase.
What does setting ESG goals mean for businesses?
Setting ESG goals means deciding on clear targets for making the business more sustainable. These goals could be reducing resources like energy and water, ensuring fair wages and safe working conditions, or choosing suppliers that follow sustainable practices. Companies might also commit to lowering their carbon emissions, promoting diversity, or safeguarding data privacy. A study by MSCI found that companies with high ESG scores have lower costs for things like loans and stock, which helps them reduce costs. Clear goals not only support cost savings but also enable businesses to monitor their progress and stay on track.
How Investing in ESG Can Help Save Money
Investing in ESG initiatives can help reduce costs in many ways:
1. Operational Efficiency and Automation
Using technology and automation can help businesses save money by improving efficiency. For example, automating the tracking and management of ESG goals can minimize reliance on manual processes, cutting down on time, errors, and excess materials. This streamlining not only reduces waste but also enhances overall operations, leading to smoother workflows. ESG strategies can affect operating profits by as much as 60%.
2. Customer Loyalty
According to Nielsen, 66% of consumers will choose sustainable brands if given the option. When companies focus on ESG, they build a good reputation. This can attract loyal customers who are willing to pay more for sustainable products.
3. Improved Talent Retention
Companies that show they care about ESG have happier employees. Organizations with the highest employee satisfaction had ESG scores 14% higher than the global average, likely due to their strong environmental performance.
4. Lower Risks
MSCI found that businesses with strong ESG scores have lower costs of capital and avoid costly legal issues. Focusing on ESG helps companies avoid risks like environmental fines, legal trouble, and negative publicity. Companies that follow ESG practices, like ethical sourcing and reducing environmental harm, face fewer risks.
How Software Helps Businesses Achieve ESG Goals
Software is essential for tracking ESG goals. It helps businesses measure their environmental impact, social progress, and governance practices. ESG software makes it easier to report data and get insights into how to improve. It also helps save time and money by automating tasks and monitoring progress.
Cority’s Sustainability Cloud is an ecosystem that enables businesses to track key metrics, identify areas for improvement, and demonstrate compliance with ESG standards. With features like real-time dashboards, streamlined reporting, and predictive analytics, Cority helps businesses stay ahead in their ESG journey while optimizing efficiency and reducing risks.
Cority’s Sustainability Cloud solution can be leveraged standalone or as part of CorityOne, our comprehensive, software-as-a-service (SaaS) platform. CorityOne goes a step further by offering an integrated system that combines environmental, health, safety, and sustainability data. The responsible business platform consists of a suite of connected solutions for managing environmental, health, safety, sustainability, and quality programs. Users can aggregate data from across the organization for a single, accurate, holistic view of EHS and ESG performance.
Want to see how Cority can help your business become more sustainable? Start exploring our Sustainability Cloud or speak with an expert!
