What Is ESG And Why It’s Important Now More Than Ever

Environmental, Social, and Governance is a strategy that assesses the impacts of an investment on the environment, society, and governance. In this article, we look at why ESG is important now more than ever.

ESG, / environmental, social, governance

What is ESG?

ESG stands for Environmental, Social, and Governance. It is a set of standards that companies can use to measure their impact on society and the environment.

This concept has been around for decades, but it has gained new urgency in recent years as the world has become more aware of the need to address climate change and other social and environmental issues.

There is no single definition of what constitutes an “ESG-friendly” company, but there are general principles that most companies strive to uphold. These include reducing greenhouse gas emissions, promoting diversity and inclusion, and adhering to high standards of corporate governance.

Many investors are now incorporating ESG factors into their decision-making process, in order to ensure that their money is being used in a way that aligns with their values. This trend is likely to continue as ESG becomes increasingly mainstream.


Why is it important now more than ever?

As the world becomes increasingly aware of the need for sustainable practices, ESG has become an important metric for measuring a company’s environmental and social responsibility. In recent years, there has been a growing movement to pressure companies to adopt sustainable practices in order to protect the environment and improve social conditions.

There are a number of reasons why ESG is important now more than ever. First, the world is facing a number of environmental challenges, such as climate change, that require urgent action. Second, investors are increasingly interested in sustainable investing, and they are using ESG criteria to make investment decisions. Finally, companies that adopt sustainable practices often outperform their peers financially.

Thus, it is clear that ESG is important for both environmental and financial reasons. Companies that fail to take ESG into account risk being left behind by their more responsible competitors.


Why do companies need to get on board with ESG?

To put it simply, ESG investing refers to making investment decisions with an eye toward improving the world we live in. ESG investing has been around for decades, but it’s only recently that mainstream investors have begun to take notice. The reason is simple: ESG investing has been proven to be a successful investment strategy. According to , sustainable and ESG investing assets have almost doubled from 2016 to 2020 and grown more than ten-fold since 2002, growing to over USD 40.5trn worldwide.

There are a number of reasons why companies need to get on board with ESG. First and foremost, ESG investing is good for the planet. Companies that focus on environmental and social issues are more likely to have a positive impact on the world we live in.

In addition, ESG investing is good for business. Companies that focus on environmental and social issues tend to be more efficient and have better governance structures in place. As a result, they often outperform their peers financially.

Finally, investors are increasingly interested in supporting companies that are making a positive impact on the world. By getting on board with ESG, companies can tap into this growing pool of capital and improve their bottom line.


How to implement ESG in your company?

The first step is to identify which ESG factors are most relevant to your company. This will vary depending on the industry you’re in and your specific business operations. Once you’ve identified the key ESG factors for your company, you need to develop a plan for how to integrate them into your business operations. This will involve setting goals and targets, as well as implementing policies and procedures to help you achieve those goals.

One of the most important aspects of implementing ESG in your company is communication. You need to make sure that all employees are aware of your company’s commitment to ESG and understand how they can help contribute to meeting those goals. You should also communicate with investors and other stakeholders about your ESG efforts so they can understand the positive impact that your company is having on society and the environment.


How can group companies and VCs collect ESG data from their portfolio companies?

One of the benefits of collecting ESG data is that it can help group companies and venture capitalists to identify risks and opportunities within their portfolios. For example, if they find out that one of their portfolio companies had poor environmental practices, they could then take steps to mitigate that risk. Alternatively, if they found that a portfolio company was doing well in terms of its ESG performance, they could look to invest more capital in that company.

In addition to helping with risk management, collecting ESG data can also provide insights into which companies are likely to be more successful in the future. For example, if a group company or VC was to find that a particular company had strong environmental practices, they might view that company as being more likely to prosper in the future as sustainability becomes increasingly important.

So, how can group companies and VCs help their community of companies learn about ESG and develop their ESG action plans whilst collecting their ESG data? They can launch their own ESG initiative using Potential.com’s platform!

Set up your custom ESG platform in 2 simple steps




As more and more investors are looking to put their money into companies that align with their values, it’s becoming increasingly important for businesses to consider their environmental, social, and governance impact. While there is no one-size-fits-all approach to ESG action plans, by taking steps to improve your company’s environmental and social impacts, you can not only do good for the world but also attract more investors and customers. So why not start today?

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