Three economists discuss how environmental, social, and governance (ESG) concerns are an important part of business today. The “E” in ESG, which stands for environmental criteria, is perhaps the most critical feature because every company uses energy, creates waste, and affects its environment. The authors point out that global investments in sustainability measures reached $30 trillion in 2019.
To help businesses understand how ESG creates value, the writers offer a five-point framework. According to this framework, business leaders should prioritize 1) facilitating top-line growth, 2) reducing costs, 3) minimizing regulatory interventions, 4) increasing employee productivity, and (5) optimizing expenditures, assets, and investments.
The writers show that there are solid economic reasons for following this framework, because being mindful of environmental impact will pay off in major ways. If a company has a strong ESG proposition, it can survive stakeholder backlash, tap new markets, and avoid state regulatory actions.
Full story: Five ways that ESG creates value