Business and ESG issues: 7 aspects to consider

Investing in Environmental, Social and Governance (ESG) issues can lead companies to real benefits. According to a McKinsey survey of over 1,100 organisations in more than 90 countries, ESG factors influence corporate policies in a positive way and companies are increasingly competitive in today's markets. ESG factors can bring concrete benefits that may vary depending on the industry and company specifics. In general, investing in ESG issues can bring benefits both financially and reputational, contributing to sustainability and long-term corporate resilience.

It is clear from the survey conducted by McKinsey that ESG parameters have evolved significantly beyond regulatory requirements or a way to improve reputation in the eyes of stakeholders. Indeed, more than 90 per cent of respondents say that ESG criteria have become a priority within their organisations, but only a third consider environmental aspects within their company as their main priority. However, 93% of respondents confirmed that at least one of the three criteria (environment, society and governance) is included in their corporate policies. The survey reveals how the motivation for growth drives companies to adopt ESG issues. This motivation is particularly strong in some sectors, e.g. energy, but is tangible in all cases due to the benefits generated by ESG investments.

The application of ESG criteria also varies by nationality and company size. For example, in Europe environmental issues tend to be more relevant than governance, while in North America social issues such as diversity and inclusion are of greater interest. In Asia-Pacific and developing markets, on the other hand, governance takes first place. Finally, when referring to company size, large companies with a turnover of $1 billion or more are oriented towards environmental issues over social and governance issues.

The McKinsey survey identifies seven key aspects that emerge from the participants' responses. Importantly, not all leading organisations possess all seven characteristics. Specifically, they are: 1) growth or compliance; 2) involvement of the board of directors and the C-suite with external stakeholders; 3) integration of ESG criteria; 4) financial incentives and performance; 5) monitoring and reporting system; 6) collaboration with external stakeholders; 7) risk mitigation.
. 3Bee fits into this context with a series of ESG projects, including the Oases of Biodiversity: places where the urban world and nature find a meeting point, areas where native flora and fauna thrive, certified places with a traceable impact thanks to technology.

With regard to growth or compliance, the survey found that if participants work in leading companies that adopt ESG criteria, they are more likely to promote growth. In contrast to those who have a less pronounced commitment to ESG metrics and whose efforts are primarily focused on adherence to industry standards or regulatory requirements. Indeed, the analysis and integration of ESG issues can help companies identify new opportunities for growth and innovation. For example, a focus on energy efficiency can lead to the adoption of green technologies that reduce operating costs and open up new markets. Attention to social responsibility can enable the development of products or services that meet the needs of consumers oriented towards sustainable values. Integrating ESG factors into business strategy can stimulate innovation and foster market differentiation.

ESG metrics can contribute to improving the reputation of companies in the eyes of stakeholders in several ways: transparency and reporting; risk management; positive impact on society and the environment; and engagement and responsiveness to stakeholder expectations. The survey shows that ESG issues engage leading companies by making them proactive and improve collaboration with external stakeholders. In addition, respondents from companies that have embraced ESG issues indicated that members of the board of directors, CFOs and CEOs, are in touch with external stakeholders and feel accountable to them. The survey highlights how this collaboration allows companies to take advantage of external expertise and resources to address ESG issues more effectively and comprehensively.

The survey found that organisations with leadership in ESG issues are more likely to say that ESG metrics are integrated into long-term business strategy and performance evaluations. This integration allows them to make evidence-based decisions and align ESG objectives with corporate priorities. In today's economic environment, it becomes crucial to implement policies that make the corporate brand (Brand reputation) stronger and more competitive with a greater commitment to environmental compliance. Hence the need for sustainable and transparent reporting. In this respect, 3Bee supports businesses in achieving sustainable development goals through biodiversity regeneration projects.

Financial incentives for ESG performance refer to mechanisms through which companies are financially rewarded or incentivised for achieving and maintaining ESG goals. These incentives can come from a variety of sources. The survey shows that organisations leading on ESG issues are more likely to provide financial incentives related to ESG performance to their executives and employees. These incentives encourage the adoption of sustainable practices and help create alignment between corporate performance and ESG goals.

Organisations that excel in leadership on ESG issues are more committed to implementing an ESG monitoring and reporting system. This allows them to transparently measure and communicate progress on environmental, social and governance dimensions. ESG reporting, also known as ESG performance reporting or ESG disclosure, refers to the practice of transparently and systematically communicating information about a company's environmental, social and governance performance. Reporting provides a comprehensive picture of a company's policies, practices and performance in relation to ESG factors, and can include various elements, including: metrics and indicators; objectives and targets; policies and procedures; and risk management. 3Bee's innovative technologies return accurate and measurable data, useful to businesses when reporting. Want to know more?

Organisations that distinguish themselves through leadership in ESG issues are more likely to adopt measures to mitigate ESG risks. This includes identifying and managing risks arising from environmental, social and governance factors to protect corporate value and address challenges that may affect the company's reputation and long-term sustainability. For example, adopting policies and procedures for thesustainable management of natural resources can reduce the risk of negative impacts on the environment and subsequent penalties or litigation. Attention to governance can help prevent regulatory violations or unethical behaviour that can harm the company. Integrating ESG aspects into risk management can improve regulatory compliance and reduce the risk of negative consequences for the company.



Article edited by Angelina Tortora