abcd..ESG: Corporate Ecosystem's New Alphabet

Ever wondered how certain new companies/startups get ahead by outperforming the rest in the industry? Well, the answer is a simple 3 letter acronym: ESG (Environment, Social, and Government).

ESG is a framework that companies and financial institutions have to report on to overlook and evaluate how sustainable and socially responsible the organizations are. With sustainability becoming the new norm, it is ever important for companies to perform well on ESG policies and practices to remain attractive as a company in the business ecosystem. ESG allows companies to invest and acquire better and effectively, it allows companies to “walk the talk”. 

What does ESG entail? The environment pillar focuses on companies as stewards of nature. How the actions and activities across the supply chain impact the environment and how best they can manage and mitigate the risks. The social pillar evaluates how well the company maintains and manages its relations with its stakeholders within the areas of operations. Lastly, the governance pillar focuses on the leadership and internal controls of the company. This pillar is perhaps the most important one since it demonstrates the decision-making strategies of a company to its investors and if the investors can trust the company. 

It is practically inevitable for companies to not integrate ESG into their company DNA. Those who implement the ESG framework will reap the benefits of financial growth, top-line growth, economies of scale, higher employee productivity, and reduced regulations. These benefits of ESG combined with startups' quick implementation of the framework are allowing them to outperform their major competitors in the industry.

In conclusion, every customer and consumer of a company needs to be aware of what activities companies engage in and how they run their operations. Familiarizing oneself with frameworks such as ESG helps understand why companies who care win.