TRANSPARENT AS A GHOST – THE IMPORTANCE OF ESG TRANSPARENCY WITHIN YOUR BUSINESS
With today’s changing business landscape, there is increased pressure for companies to be transparent about their Environmental, Social and Governance (ESG) impact. ESG topics have become increasingly front and centre with investors and stakeholders, with ESG becoming a more frequently cited focus on earnings calls after 2020 than ever before. In recent years, Blackrock CEO Larry Fink also wrote that "a company's ability to manage ESG matters demonstrates the leadership and good governance that are so essential to sustainable growth, which is why we are increasingly integrating these issues into our investment process.” The need to be socially conscious and sustainability-driven is very clearly top of mind for our industry and investors. Companies need to be mindful of taking sufficient actions, as not doing so can create a public perception and dialogue around companies deceptively using ESG concepts to drive profit. A proactive approach to ESG transparency can help enhance the public view of a company while avoiding risks to its brand and reputation.
Why is ESG important for business?
The ability to pay attention to a proper balance of people, profits and the planet will create value. Interest in ESG accelerated with dialogue from minds like Harvard Economist Michael Porter, who felt strongly that businesses benefit from thinking about value generation beyond the purely economic. This means focusing on value generation for all their stakeholders - shareholders and owners, as well as communities, employees, and customers. The market demand for businesses to demonstrate ESG accountability has reshaped how impact is disclosed. Successful ESG strategies will protect your business from regulatory risk related to greenwashing and elevate your appeal to investors.
Top Reasons a Transparent ESG Strategy is Imperative
Increase long-term value for shareholders
Attract like-minded strategic partners, employees, customers
Improve company valuation
Increase access to capital
Reduce the cost of capital
Unlock the competitive value in the market
Demonstrates best practices in governance
Mitigate shareholder activism
Being transparent with your ESG story
When your company is committed to enhancing ESG intelligence and additional transparency, you are strengthening trust with investors. The lack of regulated ESG reporting requirements leaves an open vacuum for CEOs to disclose what they want. At irlabs, we start with an easy preliminary audit based on where the company is now, highlighting strengths, and identifying areas of improvement. From there, the company will build their ESG Strategy and a report that can share with stakeholders. Creating a benchmark report now will help the company showcase year-over-year improvements in their ESG activity.
A proactive approach to ESG transparency can help enhance the public view of a company while avoiding risks to its brand and reputation. Please contact us for questions or support on how to get started on your company’s ESG story.
