ESG Is Under Attack. How Should Your Company Respond? (2024)

FAQs

How do you address ESG issues? ›

As a solution, businesses should use their ESG reports as a tool to identify and prioritize their material ESG issues, to assess and manage their ESG risks and opportunities, to set and track their ESG goals and targets, to benchmark and improve their ESG performance and impact, and to highlight and differentiate their ...

Ensure effective communication channels

Effective communication with internal and external stakeholders is essential to understanding the company's engagement to long-term value creation and develop a shared understanding with stakeholders about a company's ESG strategy and inclination.

Businesses with dedicated ESG strategies are better prepared to avoid and mitigate potential problems that lead to fines, reputational damage, and legal liabilities. By addressing these risks proactively, companies can protect their long-term financial performance.

“While backlash is often fueled by people's emotions, companies should respond objectively. The most effective response is to ensure the company's ESG positions align with company's core business strategy, are supported by empirical data, and serve the long-term welfare of the company, its stakeholders, and society.”

The large-scale trends shaping the ESG investing world have become well recognized: Climate change risk and the road to net zero, the growing existential threat of biodiversity loss, social inequalities, regulation and, lately, debate and controversy over greenwashing and what ESG should be.

Board members should be deliberate about overseeing the overall ESG program as well as specific ESG objectives, risks, and opportunities.

The most important factors to consider when choosing ESG practices are new technologies, consumer expectations, international market presence, regulatory requirements, and current operational costs.

Be Transparent About Your Efforts to Stakeholders

If you want to improve your company's ESG score, one key area to focus on is being transparent about your efforts to stakeholders. This means being clear and open about the work you're doing to improve environmental, social, and governance practices.

The correlation between ESG and employee experience is undeniable. “Employees engaged with ESG initiatives feel a sense of purpose that transcends their day-to-day tasks,” Tony observes.

Why do companies need to report ESG? ›

Companies may detect and control risks related to their operations, supply chain, and investments using ESG reporting. Companies may lessen their risk of reputational harm, regulatory penalties, and legal responsibility by evaluating and disclosing their environmental and social effect.

Some studies suggest that companies with high ESG scores tend to outperform the market, while others indicate no significant difference. The relationship between ESG factors and stock performance may vary based on the time horizon, sector, and region. Q: How can I identify ESG stocks?

Environmental, social, and governance (ESG), are a set of criteria used to evaluate companies' commitment to sustainable operations. In practice, these criteria could involve adhering to worker safety practices, finding ways to maximize energy efficiency, or ensuring diversity among a board of directors.

Be transparent

Transparency in ESG communications is crucial. Being upfront about your company's environmental, social and governance commitments and performance – including recognising where you've fallen short of targets – is essential to building trust with all stakeholder groups.