ESG as a “business condition, not an add-on” value driver

Now almost every company has an interest in social and environmental responsibility or is showing it through their website. If you’re really serious about taking your corporate responsibility beyond just wrapping it up with a picture of a tree, you’ll need to move away from a few selective actions to avoid responsibility and be more proactive.
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The integration of ESG (Environmental, Social, and Governance) into all areas of an IT company means aligning product development, technology strategy, business model and overall corporate culture with ESG values. Although it takes a lot of effort at the beginning of this change of direction, valuable value can be obtained in the mid- to long-term.

What is ESG?

Environmental, Social, and Governance are more advanced concepts in Corporate Social Responsibility (CSR). It is used to evaluate corporate social responsibility, which is currently gaining a lot of importance. Over the past two decades, the ESG movement has evolved from the UN’s Corporate Social Responsibility initiative to a global phenomenon, and has now grown to more than $30 trillion in related assets. The three areas of ESG are:

Environment: Sustainable management and investment of companies and employees, ecological commitment, waste/hazardous waste handling, personal ecological efficiency (energy, water, CO2 emission), soil surface sealing, environmental management, supply chain, etc.
Society: working conditions, occupational safety, product responsibility, fair opportunity, supplier management
Corporate Governance: Compliance with Compliance, Business Ethics, and Independence of the Audit Committee and Shareholder Structures

Difference Between ESG and CSR

An important difference between ESG and CSR is that CSR is more of an “additional factor”. In addition to the actual corporate goals, corporate responsibilities should not be overlooked. It’s about putting a phrase on the uniform of a local soccer club. ESG goes beyond CSR and is essential. It extends down to the core operations of the enterprise and is characterized by an internal corporate culture that behaves in accordance with ecological and social standards.

If CSR is sponsoring a tree planting project, ESG is about achieving zero emissions for the company itself, as well as for customers and partners. In the social realm, offering an internship in a local school is as different as building a livable future by giving virtually equal opportunities to all.

Climate change and the acceptance of ESG as an incentive

Running a business sustainably and socially affects not only products and services, but also all areas of the business, including management, operations, people, finance, supply chain, MR, IT, marketing, and sales.

It is therefore essential to support enterprises in the implementation of an effective ESG strategy. These strategies are much broader than simple marketing campaigns and often require significant changes in organizational structures, strategies, practices and processes. Building trust with all stakeholders is key. Sometimes, you have to say goodbye to an old partner who doesn’t go down this road with you or who you don’t want to go with. It may be uncomfortable at first, but in the end it benefits everyone.

In order to establish ESG in corporate culture, conformance to ecological and social standards should not be viewed as a cost driver, but as a value driver. Sustainability or fair trade can be seen as an incentive to redesign its own processes and products. Active inclusion and inclusion of people with disabilities across cultures fosters group bonds and also facilitates the process of dealing with partners and customers around the world. You should always ask yourself, “What could be improved?”

Can packaging be reduced, for example, to save material and transport costs and therefore energy? Can an optimized digital process speed up the development process to reduce production line congestion and ultimately satisfy customers with faster delivery times? If you can’t find a suitable expert in your country, is it worth looking abroad? Can you boldly set up a business overseas and open up opportunities other than immigration to local people? This is possible with remote collaboration technology.

Companies that think in this way internalize ESG as part of the new normal and use ESG criteria as a profitable value driver.

ESG as a good business condition

Implementing ESG standards across the entire value chain can provide a competitive advantage, such as increasing the attractiveness of a company from an employee point of view and justifying higher growth. In addition, it was found that companies that have internalized ESG also responded more smoothly to the demise. If you don’t use ESG now, you risk losing your investment, reputation, customers, employees, and business opportunities.

Therefore, ESG should be classified as a verifiable value driver. The way companies engage with local and global communities is no longer just a page in an annual report or one of the topics covered in a company briefing. ESG is a way of doing business. And companies are adopting ESG not only because it’s profitable (even if it actually leads to revenue), but because it’s the right thing to do. [email protected]

Source: ITWorld Korea by

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