Environmental, social and governance (ESG) considerations have existed in various forms for decades but are becoming more important to a multitude of stakeholders, including consumers, investors, credit rating agencies, lenders and regulators.
ESG-related concerns are particularly meaningful to an increasing number of consumers, especially Millennials and Generation Z/iGens. Many socioeconomic factors, such as protecting the environment, addressing climate change and poverty, and diversity based on race, gender and sexual orientation, are extremely important to these groups.
This ever-expanding base will continue to have a lot of influence and make purchasing and investment decisions based on ESG.
These stakeholders, along with investors, employees and society, demand more than legal compliance. They want companies to have a positive impact and show true commitment to sustainability leadership. This requires an active contribution to the UN Sustainable Development Goals (SDGs) and a journey toward value creation across the whole business model.
Increased investor focus and regulations
ESG criteria are an increasingly popular way for investors to evaluate companies in which they might invest. These criteria can help them avoid companies that pose a greater financial risk due to areas like environmental practices. ESG regulation is also continuing to tighten globally.
What do the pillars cover?
Here is a brief list for each:
Now is the time for action
According to the KPMG Survey of Sustainability Reporting 2024, 96% of the G250 – the world’s largest companies – and 79% of the N100 – 5,800 companies comprising the largest 100 firms in 58 countries – report on their sustainability performance.
Sustainability and corporate social responsibility (CSR) are no longer things that businesses can talk about but fail to act on. Greenwashing – putting an environmentally friendly spin on business practices – is no longer acceptable to the primary drivers of change – the financial markets. Instead, senior management must find an effective way to quantify its company’s operations against set ESG criteria.
Active engagement by corporate boards stems from a profound change in the way financial markets are approaching sustainability and CSR. Investors are focusing on more than just financial statements. They are now taking an integrated approach to investment decision-making that involves financial information and ESG. This strategy is gaining support from government authorities.
Improving labor standards and human rights, and reducing resource use, carbon footprints and emissions, among other concepts, are vital. Companies must manage their performance and that of their supply chains. Multiple standards exist to help businesses drive positive outcomes in these areas, providing metrics that relevant managers have traditionally focused on when looking to improve sustainability and CSR.
How is ESG different?
ESG encompasses these factors and yet focuses on their material impact on the business. The aim of relevant managers and board members may, ultimately, be the same – to work more efficiently while reducing the impact on the environment and society – but the way they describe and achieve these goals can be quite different.
Relevant managers are concerned with improving sustainability to reduce risk while the board is interested in ESG because it is a vital part of what investors consider – it is part of its materiality.
Why improve the quality of ESG information?
The benefits include:
- Increased recognition, trust and credibility
- Risk resilience and an increased chance of long-term success
- Improved Board and C-level engagement
- Strengthened reporting and management systems
- Improved stakeholder communications
Introducing IMPACT NOW for sustainability
With ever-increasing concerns about climate change, human rights, effective governance and economic stability, coupled with new regulations, legislation and consumer demands, sustainability must be front and center of every organization.
As sustainability is complex and rapidly evolving, we hear organizations’ concerns daily. Wherever you are, whatever your industry and ultimate sustainability aspirations, our IMPACT NOW experts are ready to support you. Utilizing over 30 years of sustainability leadership, we help you move from complexity to clarity, and from advice to meaningful action.
Our sustainability impact services and solutions are broadly categorized under Climate, Circularity, Nature and ESG Assurance. This helps you pinpoint exactly where you need to make your impact now.
Why SGS ESG Assurance?
A robust ESG strategy and disclosure, aligned with your organization’s purpose, allows you to address these new expectations and adapt to changes while reaping the rewards.
Whether you wish to take your first steps, enhance your environmental credentials, tackle serious social issues like forced labor, or comply with new regulations or standards, our international community of ESG experts will find the best solution. From a health check to taking the initial steps to extensive verification, disclosure and report assurance to demonstrate your ESG credentials, we are here to help you with whatever you need.
Contact us now to unite with a proven ESG partner.
For further information, please contact:
Simon Colton
Head of Non-Financial Reporting & Sustainable Finance
SGS
t: +31 (6) 53359560
About SGS
SGS is the world’s leading Testing, Inspection and Certification company. We operate a network of over 2,500 laboratories and business facilities across 115 countries, supported by a team of 99,500 dedicated professionals. With over 145 years of service excellence, we combine the precision and accuracy that define Swiss companies to help organizations achieve the highest standards of quality, compliance and sustainability.
Our brand promise – when you need to be sure – underscores our commitment to trust, integrity and reliability, enabling businesses to thrive with confidence. We proudly deliver our expert services through the SGS name and trusted specialized brands, including Brightsight, Bluesign, Maine Pointe and Nutrasource.
SGS is publicly traded on the SIX Swiss Exchange under the ticker symbol SGSN (ISIN CH1256740924, Reuters SGSN.S, Bloomberg SGSN:SW).
16th Floor, Block A, No.73 Fucheng Road, Century Yuhui Mansion,
Beijing, Haidian District, China