Esg
Esg
The environmental pillar often gets the most attention. Companies are focusing on reducing their carbon
footprints, packaging waste, water usage and their overall effect on the environment. Companies have found
that have a beneficial impact on the planet can also have a positive financial impact. Lessening the amount of
material used in packaging usually reduces the overall spending on those materials, for example. Walmart
keyed in on packaging through their zero-waste initiative, pushing for less packaging through their supply chain
and for more of that packaging to be sourced from recycled or reused materials. 4
Other businesses that have an undeniable and obvious environmental impact, such as mining or food
production, approach the environmental pillar through benchmarking and reducing. One of the challenges
with the environmental pillar is that a business's impact are often not fully costed, meaning that there
are externalities that aren't being captured. The all-in costs of wastewater, carbon dioxide, land reclamation
and waste in general are not easy to calculate because companies are not always the ones on the hook for the
waste they produce. This is where benchmarking comes in to try and quantify those externalities, so that
progress in reducing them can be tracked and reported in a meaningful way.
On the employee side, businesses refocus on retention and engagement strategies, including more
responsive benefits such as better maternity and paternity benefits, flexible scheduling, and learning
and development opportunities. For community engagement, companies have come up with many
ways to give back, including fundraising, sponsorship, scholarships and investment in local public
projects.
On a global social scale, a business needs to be aware of how its supply chain is being filled. Is child
labor going into your end product? Are people being paid fairly? Is the work environment safe?
Many of the large retailers have struggled with this as public outrage over tragedies like
the Bangladesh factory collapse, which have illustrated previously unaccounted for risks in sourcing
from the lowest-cost supplier. (For more, see: "Go Green With Socially Responsible Investing.")