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Can ESG practices increase corporate resilience?

More and more institutional fund managers adopt ESG reporting and the tendency is for ESG to be integrated across the whole asset base under management. On policy level, this has also been supported by the Action Plan on Sustainable Finance and regulatory pressure continues to intensify.

 

The Covid-19 pandemic has not only caused a health crisis, but also market volatility and the need for more resilient investment solutions. It was a wake-up call for the restructure of the global economic order towards sustainability. It is not surprising the fact that companies, which take sustainability seriously, seem to significantly outperform their peers and this has brought ESG factors to the forefront.

 

Companies have to consider how ESG factors can be employed for a more resilient future.

 

ESG strategy and risk management

 

Building an ESG strategy is the starting point with stakeholders taking the basic stage. Investors are more and more interested in the way a company manages the social and environmental risks in an ever-changing economic environment, and this is why the company needs to provide the related information widely. Transparency and high-quality communication on ESG performance are also important.

 

ESG and productivity

 

Companies with ESG commitments tend to attract quality employees or enhance their motivation, resulting in increased productivity. It’s also proven that higher job satisfaction is positively correlated with shareholder returns.

 

ESG execution and cost control

 

Executing ESG effectively can reduce costs substantially. ESG can provide a roadmap and it’s a very good way to control them. Investing in initiatives that provide cost savings can make businesses more resilient against not only the pandemic, but climate change, too.

 

ESG on supply chain

 

Ensuring supply of materials is critical for the survivability of companies. The pandemic exposed the fragility of global supply chains, making them vulnerable to risk. Moreover, investors cannot neglect issues related to forced labour, dangerous working conditions or quality issues anymore.

 

Strong ESG commitment and governments

 

Companies with strong ESG strategy are more prepared on adverse government action, reducing risks. Such companies can, also, gain government support.

CSE is a leading ESG Consulting firm with sector-based integrated consulting services on Sustainability (ESG) from ESG Reporting and Ratings, Certification & External Assurance, to Impact Assessment and Strategic Planning. For more than 14 years, CSE helps FORTUNE 500 and other organizations around the globe improve their ESG Ratings and maximize their social, economic and environmental impact.

 

To guide you securely into building or optimizing your Sustainability (ESG) strategy, CSE can provide coaching and practical tools.

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