An Introduction to ESG: What is ESG & Why is it Important?Posted in : Supplementary Articles NI on 24 January 2023
In recent years, there have been increasing amounts of governmental attention given to climate change. Indeed, in the Climate Change Act (Northern Ireland) 2022, the Assembly committed to halving all greenhouse gas emissions by 2030 to reach net zero no later than 2050. To achieve this, it is expected that Northern Ireland’s first Climate Action Plan will be published in December 2023 containing targets for reductions in each of the highest emitting sectors.
As a result of these targets set out by governments, it is clear society is responding by becoming more aware of how we can use our consumer power both as businesses and individuals to make a positive impact.
This article provides a brief introduction to ESG, and why it is important for helping businesses achieve the above.
What is ESG?
Though it is not a brand-new concept, ESG is becoming a hot topic for business. This has led to an increased interest to understand more about what ESG is and why ESG is important.
In short, ESG means Environmental, Social, and Governance.
The three main areas of ESG focus on overarching factors which can be used to help a business assess its current level of sustainability.
- Environmental factors focus on the conservation of the natural world (climate change, natural resources, and pollution) and environmental business opportunities.
- Social factors consider people and relationships, and the business’s impact on the wider community.
- Governance provides standards for operating a company.
ESG – An Ethical Investment for Business & The Top Stakeholders
There are a handful of key stakeholders who are extremely interested in businesses that support sustainability:
- HR Professionals: HR is central to ESG in most organisations, and is responsible for making sure the workforce is educated and made aware of its importance.
- Company Directors: The directors of a company and top boards need to be aware of the impact that their business is having in the three main areas of ESG. This information allows them to assess and re-evaluate their efforts to maintain sustainability and their reputation.
- Employees: ESG is not just about the external impact of company policy but also internally. Employees are now more aware of sustainability and its importance in business. It can help them feel empowered to do good and embrace diversity. Individuals are wanting to work for more sustainable businesses, therefore ESG is a huge drive to retain and attract talent.
- Suppliers: ESG considers the ethics of the business and goes further than its people and product. Your supply chain also needs to adhere to ESG responsibilities.
- Investors: Companies who demonstrate that they are actioning the principles of ESG suggest they have a long-term vision and are viable investment opportunities. Investors now want to invest in ethical, sustainable, and eco-friendly initiatives as they do due diligence across their portfolio of clients. They do not want to invest in a business that is ultimately damaging to the environment or negatively impacting the community.
- The Public: People are more aware of the need for sustainability and more inclined to support businesses that vouch for and act on the principles of ESG. It empowers consumers to know they are doing good with each purchase.
ESG in the Workplace Training
Identifying and managing financial material environmental, social, and governance risks and opportunities is a key part of ESG strategy. Therefore, it is important that a company’s training includes ESG awareness.
ESG in the Workplace Training provides a critical understanding of the key concepts of environmental, social, and governance issues which underpin a company’s level of sustainability. This allows employees to increase their awareness and contribute to their role in ways that affirm the overarching ESG strategy for their workplace.
ESG training is not only important on an individual training basis, but it also provides an opportunity for employers to demonstrate the long-term vision and commitment to ESG to the whole workforce. This has been shown to have a positive impact on the engagement and retention of employees.
With better knowledge and awareness of ESG, companies are better equipped to conduct assessments, collect insights from stakeholders, set goals and conduct a gap analysis, develop a measurable roadmap and KPIs, and report on ESG progress.
Book ESG Training for Your Workplace Today
At Legal Island, we are delighted to announce the launch of our brand-new eLearning course, ESG in the Workplace.
This is a course for all employees that will develop their understanding of the core principles of ESG and the impact they have on behaviours and processes in the workplace. It will provide practical examples and useful tips on how they can help their organisation achieve its ESG goals.
To receive further details on how to book ESG training with Legal Island on behalf of your organisation, register for a free demo and we will be in touch with more details on how to enrol your company.
The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.