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ESG: what are the advantages and how to apply it?

The modern world has increasingly required that business have a posture focused on environmental, social and governance responsibility, and, therefore, the term “ESG” has been standing out over the past years.

The ESG concept refers to three essential pillars: Environmental, Social and Governance. These principles direct companies to develop more sustainable, transparent and ethical practices, which bring countless benefits to corporations, employees and society as a whole.

In this article, you will see the advantages of implementing ESG in companies and how to do it in a practical and efficient way. Let’s see it!

The ESG criteria

ESG describes a set of criteria that take into account the relationship between companies and the environmental impact they cause, the social interactions that are part of their routine and even the governance practices.

The environmental issue is focused on the management of natural resources and the effects caused by the company. On the other hand, social refers to issues of inclusion, diversity and human rights. Finally, the pillar of governance analyzes the system of leadership, ethics and decision-making.

Implementing the ESG criteria in a company benefits the environment and society.

Benefits of implementing the ESG

Applying the ESG practices in corporations enables a world of benefits that collaborate to make most of the population reach a better quality of life. By implementing environmental strategies, the consequence is the reduction of carbon emissions and the decrease in the consumption of natural resources which are limited, contributing to the preservation of the environment.

The practices of ESG focused on the social pillar aim to improve the social conditions related to diversity and inclusion, in addition to applying practices that improve the working conditions for employees, allowing the company to retain talents, improve its image and increase customer trust.

These practices collaborate to increase investor trust and minimize the risk of scandals related to the company, as well as the adoption of consistent practices of corporate governance, such as organizational transparency and ethical decision-making.

Read more: Graduate course x MBA: understand the differences and do not confuse them anymore

How to apply the principles of ESG?

To implement the principles of ESG in a corporation, it is necessary to analyze and implement processes, such as:

  • Initial evaluation: extensive analysis of the current practices of the company in relation to the pillars of ESG.
  • Determine goals: after the initial evaluation, it is necessary to establish clear and measurable goals in order to direct progress in each of the practices to be implemented.
  • Application of internal processes: implementation of the principles of ESG in the internal processes of the company, involving the development of more sustainable products or, even, promoting a more inclusive work environment.
  • Team Engagement: engage employees, customers and other stakeholders to implement the pillars of ESG efficiently.

Challenges and how to overcome them

Although there are several benefits of implementing the ESG strategies, most corporations face challenges in this process. The highest difficulties involve changing the organizational culture, measuring the results of the strategies implemented and the lack of commitment of some teams.

The key actions to overcome challenges are effective training and a committed and prepared leadership to deal with situations that can often happen. In addition, it is necessary to implement a system of monitoring metrics to evaluate data of implementations.

To ensure that the implementation of ESG strategies is successful, it is necessary to have leaders specialized in the subject. One of the best ways to deepen the knowledge in this topic is through an MBA.

The USP/Esalq offers an MBA in Business Management, which has a renowned faculty and online classes. You can study whenever and wherever you want! Take this opportunity to specialize in an MBA with a certificate from USP, one of the best universities in the world. Apply now!

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Monique Gremes
Monique Gremes
Publicitária, apaixonada por comunicação, natureza, gatos e viagens. Amo aprender algo novo e colocar em prática todo o meu conhecimento. Me encontrei na área do marketing e escrever conteúdos ocupa um espaço grande em meu coração. Meu propósito é colaborar para que vivamos em um mundo melhor e acredito que não há forma mais poderosa do que viabilizar e espalhar o conhecimento por meio da escrita.