The engine that powers sustainable organisations
ESG refers to the environmental, social, and governance aspects of businesses. In this article, we explore the 'E' in ESG and why it's an important consideration for businesses and investors.
The 'E' in ESG is one of three criteria concerning more transparent communication between businesses and their Stakeholders. Specifically, it stands for 'environment', which is dealing with environmental risks and natural resource management. Under this sphere, companies measure and report their environmental impact and performance against pre-determined criteria.
Environmental criteria vary from industry to industry depending on the unique operational settings and production processes of a company as well as the regulatory climate in which it operates. Today, they determine how well a company performs.
Here is a non-exhaustive overview of environmental criteria common across industries.
The environmental part of the ESG equation is often given the most emphasis and for good reason. The love for mother earth aside, environmental issues pose the greatest threats to businesses. In the World Economic Forum's Risk Report of the last few years, the top five perceived risks by experts are all environmental risks, with climate-related risks topping the list in 2022. These risks have a direct impact on the everyday operations of a business. From supply shortages to asset damage to public retaliation, businesses have a very real incentive to manage their environmental footprint and prepare for a future with more volatile environmental events. And it's not just risky business. The opportunities to cater to changing regulations, demographics, and investment priorities are enough to drive the most forward-looking companies to embark on sustainability transformations that reinvent their business models and place them ahead of the curve.
The Daato software is a powerful ESG data management system that enables mid- to enterprise-level companies to collect, organize, and understand their environmental data. Our customers use Daato to exchange data with stakeholders, keep track of changes to their data repository, and even auto-generate framework-compliant reports. The key to taking charge of your environmental performance is data, and Daato was created for that purpose. The software tells you what environmental indicators you need to measure and report depending on the legislation in effect or your chosen reporting framework, and it generates analytical reports that can help you identify gaps in performance. Getting the 'E' in ESG right is critical to navigate your business through the risks and opportunities associated with environmental factors