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Environmental, social, and governance concerns should be addressed in companies, and these should be a top priority for board members. Back then, incorporating ESG practices used to be a public relations tactic to attract the audience. But the business world is changing rapidly, and there is a strict need for every business to incorporate these issues. It has become essential due to rapidly increasing competition and changing business environment. As a result, many ESG advisory services have taken place to help firms introduce these practices.
Major investors take ESG performance into consideration before investing in any company. They are clear on terms that they expect companies to be active in their policies and communication.
ESG advisory services are benefiting firms and investors in a lot of ways. The benefit of actively investing in ESG practices goes beyond attracting investors and creating a positive public image. A strong ESG plan can open doors of opportunities for a business. They can attract large capital, make their brand stronger and promote sustainable growth.
ESG implementation can benefit both companies and investors. Here’s how.
1. Improved stock liquidity
Individual and major institutional investors invest in businesses that actively control ESG issues and perform in a sustainable manner, that too on a large scale. Operating sustainably leads to growth in double-digit rates.
Major investment firms and research companies like MSCI have introduced indices that calculate and rank brands based on their ESG practices compared to their industry competitors. The investors look at these indices and invest in a large capital towards the companies that execute consistent and impressive ESG policies. These indices attract investors and shareholders in the long term and potentially increase the demand of a company.
Several investment firms are even introducing ESG evaluation. It means that companies will continue to incorporate ESG policies with ESG professionals to be on the top of index rates.
2. Professionals can open competitive value.
Firms that understand the importance of introducing sustainable practices in their operation are able to find out strategic opportunities and tackle challenges. Advanced and integrated ESG practices can increase a company’s competitive value as compared to other firms.
Staff members who try to improve the labor conditions in the company, introduce diversity in their teams, operate in favor of their communities, and take some steps on sustainable environmental policies indirectly make the brand stronger. With the help of ESG professionals, companies can evaluate these practices in favor of social performance.
3. A proactive stand on these issues can keep away the activists
Activists always use governance weaknesses as the opportunity to create campaigns against firms and big brands. They are rapidly targeting board members and management teams that lack in taking any stand on social and environmental issues.
That is why it has become more critical for companies to prioritize ESG issues that can drastically affect the image of the entire industry and keep away the intervention of activists.
If your brand becomes a target of activists who are focused on ESG, do not take a step back. Many activist investment firms provide their own ESG funds to companies. Many of them partner with companies to introduce ESG policies to create long-term growth. You can seek some advice from ESG advisory services to get in the right direction. They can recommend proper steps for executing these practices.
Developing an ESG plan has become an utmost necessity for all the firms battling today’s business climate. If your business stands new, take help from esg strategy to be guided in the right direction. They will help you from scratch to the final step. It is easy to keep up on the top of company indices if you stay consistent with your practices.