At BDO, we view sustainability through the universally recognised ESG framework - that is, environmental, social and governance matters. Using the ESG framework helps to unpack the wide-ranging risks and metrics that fall under the term ‘sustainability’. ESG cuts across the functions of a business to assess how an organisation manages risks and creates long-term value.
Why is ESG important?
This global sustainability movement is becoming critical as part of a business’ social licence to trade. Businesses that fail to act in this space risk potential impacts on their reputation, market opportunities, and even employee value proposition.
A focus on ESG can do more than just meet growing stakeholder demands. Savvy boards are also recognising the broader business benefits, including the potential to create and sustain long-term value through:
- Corporate reputation – ESG can enhance a company’s license to operate making it easier to accomplish business objectives and respond to crisis scenarios with key stakeholder groups.
- Risk reduction – ESG can assist with the identification of immediate and long-term risks depending on the industry and business model.
- Opportunity management – Shifting market and non-market conditions can expose unmet needs for new products and/or services, potential customer bases, and potential strategic relationships for addressing ESG issues.
- Culture and intrinsic values – ESG maturity is an indicator of a company’s commitment to building a high-performing, purpose-driven workforce and inclusive culture.