Companies shouldn’t just focus on ESG because they HAVE to – it must be authentic
21st April 2023
Much has been written about Environmental, Social and Governance – known as ESG for short – but at Trickle, we believe this goes beyond profit margins and financial performance. It’s about contributing to the greater good of society as a whole.
ESG is a set of criteria guiding a business’s behaviour. It covers everything from complying with laws and regulations, managing data security and privacy, to improving diversity and equality and how good a company is at reducing its carbon footprint.
There was a time, not too long ago, when ESG issues were unlikely to even make it onto a board’s agenda unless there was a red flag, such as particularly poor staff retention figures, to worry about. But thanks to recent changes to the law, and the shifting expectations of investors, employees and consumers, it’s no longer enough to just jump on the bandwagon and pay lip service to ESG.
The Covid-19 pandemic has also highlighted the social aspect of ESG – specifically, how an organisation looks after its employees, customers and suppliers. Wellbeing went from a ‘nice to have’ to a top priority almost overnight.
And it really does matter – recent research from PWC showed that 76% of consumers would stop doing business with a company that they believed treated employees, communities or the environment badly.
Commitment to ESG must come from the very top, and be authentic, as people are increasingly seeing through attempts at ‘greenwashing,’ or its younger sibling, ‘social washing’.
There’s not just one piece of legislation that covers all ESG factors, but much of it comes from the UK Corporate Governance Code 2018, along with the Companies Act 2006.
For large companies that are listed, have over 500 employees or an annual turnover of more than £500m, ESG reporting is mandatory thanks to new legislation known as the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and the Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022.
These new laws mean many companies must report on ESG performance to their boards. Non-financial information has always been required in annual reports, but in 2022, this was expanded to include sustainability matters.
Whether the law applies to your company or not, the way businesses operate is increasingly being influenced by forces such as the preferences of investors, whose priorities often go far beyond regulatory and legal requirements. Many have and will stop investing in companies without good ESG policies in place.
As Millennials and Gen Z make up an ever-increasing proportion of the workforce and become the largest consumer group, the case for ESG will only get stronger. These younger generations are more ESG-conscious than their predecessors, seeking value-based companies to work for and buy from, meaning organisations have had to up their game to ensure they retain this group’s interest and spending power.
Our employee engagement platform can support your organisation’s ESG strategy or policies, especially the social and governance aspects. For example:
- Identifying areas where your company culture could be improved, allowing you to make positive changes.
- Giving your people an anonymous forum to confidently speak up about anything that’s worrying them.
- Regularly checking in on your team’s wellbeing.
- Providing you with data that can demonstrate your healthy corporate culture to potential investors.
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By giving your people a place to voice their suggestions & concerns when they need to, you’ll inspire a happier, more productive and loyal workforce.