Impakter
  • FINANCE
    • ESG News
    • Sustainable Finance
    • Business
  • TECH
    • Start-up
    • AI & Machine Learning
    • Green Tech
  • Environment
    • Biodiversity
    • Climate Change
    • Circular Economy
    • Energy
  • Industry News
    • Entertainment
    • Fashion & Lifestyle
    • Food and Agriculture
    • Health
    • Politics & Foreign Affairs
    • Philanthropy
    • Science
    • Sport
  • Editorial Series
    • SDGs Series
    • Shape Your Future
    • Sustainable Cities
      • Copenhagen
      • San Francisco
      • Seattle
      • Sydney
  • About us
    • Company
    • Team
    • Global Leaders
    • Partners
    • Write for Impakter
    • Contact Us
    • Privacy Policy
No Result
View All Result
  • FINANCE
    • ESG News
    • Sustainable Finance
    • Business
  • TECH
    • Start-up
    • AI & Machine Learning
    • Green Tech
  • Environment
    • Biodiversity
    • Climate Change
    • Circular Economy
    • Energy
  • Industry News
    • Entertainment
    • Fashion & Lifestyle
    • Food and Agriculture
    • Health
    • Politics & Foreign Affairs
    • Philanthropy
    • Science
    • Sport
  • Editorial Series
    • SDGs Series
    • Shape Your Future
    • Sustainable Cities
      • Copenhagen
      • San Francisco
      • Seattle
      • Sydney
  • About us
    • Company
    • Team
    • Global Leaders
    • Partners
    • Write for Impakter
    • Contact Us
    • Privacy Policy
No Result
View All Result
Impakter
No Result
View All Result
Home ESG FINANCE Business

ESG: A Strategic Imperative or Inconvenient Necessity?

In today's rapidly evolving business landscape, companies face unprecedented challenges: beyond traditional financial metrics, factors such as environmental, social, and governance (ESG) are becoming increasingly crucial

byBilly Kavanagh
September 25, 2023
in Business, Society
Share on FacebookShare on Twitter

In today’s rapidly evolving business landscape, companies face unprecedented challenges. Beyond traditional financial metrics, factors such as environmental, social, and governance (ESG) are playing an increasingly crucial role in shaping the long-term competitiveness of businesses. Research consistently shows that companies failing to integrate ESG principles into their corporate strategies not only risk compromising their sustainability but also miss out on attracting vital long-term investors.

Investors’ Shift Towards ESG

Investors worldwide are recognizing the significance of ESG factors in investment decisions. This shift is evident in the substantial growth of financial institutions committing to the United Nations’ Principles for Responsible Investment (PRI), amassing over 3,000 signatories and managing assets exceeding $100 trillion. Consequently, the demand for sustainability information continues to surge, making a company’s response to ESG expectations a critical factor in determining its cost of capital and attractiveness to investors. Engaging with investors on ESG matters and shaping messages accordingly have become more crucial than ever.

Internal Collaboration for Effective External Messaging

Effectively conveying a company’s sustainability strategy to investors requires close collaboration between Investor Relations (IR) and ESG professionals, along with input from other departments such as Human Resources, Communications, and Procurement. The CSA (Corporate Sustainability Assessment) serves as a toolkit guiding these discussions by focusing on both tangible and intangible sustainability factors that can impact a company’s value drivers and competitive position.

It prompts companies to identify and explain the links between ESG and key value drivers such as growth, risk, and cost. This approach helps companies measure and demonstrate the business value of sustainability in language investors understand, whether through presentations, roadshows, earnings calls, or investor inquiries.

Enhancing Collaboration Across Industries

Participation in the CSA fosters greater collaboration among ESG, IR, and other departments across various industries, including banking, mining, and consumer goods. The CSA’s comprehensive scope, covering financially material sustainability topics, encourages cooperation and knowledge sharing throughout a company’s operations. By addressing ESG issues systematically, businesses can better position themselves as leaders in sustainability.

Proving the Business Case for ESG

The CSA’s criteria evolve over time, starting with general questions to assess a company’s understanding of risks and opportunities in a particular area. Subsequent assessments delve deeper, requiring companies to establish a clear link between sustainability issues and their business strategies through key performance indicators (KPIs), metrics, targets, and progress tracking. This rigorous approach enables companies to build a compelling case for the alignment of ESG issues with their long-term business strategies, supported by real company data.

“The S&P Global CSA is both our yardstick to measure how we ARE doing, and our lighthouse to know how we SHOULD BE,” states Sandeep Chandna, Chief Sustainability Officer at Tech Mahindra, India.

Addressing Criticisms of ESG

While the adoption of ESG principles continues to gain momentum, it is not without its detractors. Critics have raised concerns in four primary areas:

1. ESG as a Distraction: Some argue that it detracts from a company’s primary goal of profit maximization, viewing it as a mere public-relations move or a means to capitalize on societal motives.

2. Complexity: ESG integration can be challenging, as it requires balancing the interests of various stakeholders, making decisions on resource allocation, and navigating trade-offs.

3. Measurement Challenges: Critics contend that ESG scores lack accuracy and consistency, with differences in methodologies across providers, hindering meaningful comparisons.

4. Causal Link with Financial Performance: Skeptics question whether ESG performance truly correlates with financial outperformance or if other factors are at play.

However, the responses to these criticisms emphasize the importance of addressing externalities, showcasing companies that have succeeded in ESG integration, and recognizing ongoing improvements in their measurement.

The Role of Social License

In today’s dynamic business landscape, ESG integration is no longer optional but essential for long-term success. Investors, regulators, and stakeholders increasingly prioritize companies that prioritize sustainability. By participating in initiatives like the S&P Corporate Sustainability Assessment, businesses can not only demonstrate their commitment to it but also navigate emerging trends, foster internal collaboration, and tailor their messages to investor priorities. Moreover, addressing criticisms and recognizing the importance of social license is integral to building a resilient and sustainable business model in an ever-evolving world. Embracing ESG is not just a strategic choice; it’s imperative for business sustainability in the 21st century.


Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com — Featured Photo Credit: Unsplash. 

Tags: businessenviromentESG
Previous Post

Buzzin Corner: The Latest Sustainable Initiative by Sebastian Vettel

Next Post

How Will El Niño Change in the Future?

Billy Kavanagh

Billy Kavanagh

Born in Manchester, Billy holds a BSc in Economics and Government from the London School of Economics, and has previously worked at The Times and has hosted his own podcast. He has a particular interest in global current affairs, Russian politics and culture and sports governance. When he isn’t working, you can often find Billy on the sports field or watching his beloved Manchester United.

Related Posts

ESG news regarding UK abandoning green taxonomy for sustainability reporting, South Africa energy company Eskom switching to mainly clean energy, fish populations increasing in EU, and China’s increased focus on AI technologies
Business

UK Drops Green Taxonomy Plan, Shifts Focus to Sustainability Reporting

July 16, 2025
refuse-derived fuel
Business

This Fuel Is 50% Plastic — and It’s Slipping Through a Loophole in International Waste Law

July 16, 2025
Brazil’s Carbon Credit Schemes Linked to Illegal Logging
Business

Brazil’s Carbon Credit Schemes Linked to Illegal Logging

July 16, 2025
Next Post
El Nino

How Will El Niño Change in the Future?

Recent News

Catastrophe Bond Sales Hit Record $18.1B

Catastrophe Bond Sales Hit Record $18.1B

July 17, 2025
ESG news regarding UK abandoning green taxonomy for sustainability reporting, South Africa energy company Eskom switching to mainly clean energy, fish populations increasing in EU, and China’s increased focus on AI technologies

UK Drops Green Taxonomy Plan, Shifts Focus to Sustainability Reporting

July 16, 2025
refuse-derived fuel

This Fuel Is 50% Plastic — and It’s Slipping Through a Loophole in International Waste Law

July 16, 2025

Impakter informs you through the ESG news site and empowers your business CSRD compliance and ESG compliance with its Klimado SaaS ESG assessment tool marketplace that can be found on: www.klimado.com

Registered Office Address

Klimado GmbH
Niddastrasse 63,

60329, Frankfurt am Main, Germany


IMPAKTER is a Klimado GmbH website

Impakter is a publication that is identified by the following International Standard Serial Number (ISSN) is the following 2515-9569 (Printed) and 2515-9577 (online – Website).


Office Hours - Monday to Friday

9.30am - 5.00pm CEST


Email

stories [at] impakter.com

By Audience

  • TECH
    • Start-up
    • AI & MACHINE LEARNING
    • Green Tech
  • ENVIRONMENT
    • Biodiversity
    • Energy
    • Circular Economy
    • Climate Change
  • INDUSTRY NEWS
    • Entertainment
    • Fashion & Lifestyle
    • Food and Agriculture
    • Health
    • Politics & Foreign Affairs
    • Philanthropy
    • Science
    • Sport
    • Editorial Series

ESG/Finance Daily

  • ESG News
  • Sustainable Finance
  • Business

Klimado Platform

  • Klimado ESG Tool
  • Impakter News

About Us

  • Team
  • Global Leaders
  • Partners
  • Write for Impakter
  • Contact Us
  • Privacy Policy

© 2025 IMPAKTER. All rights reserved.

No Result
View All Result
  • FINANCE
    • ESG News
    • Sustainable Finance
    • Business
  • TECH
    • Start-up
    • AI & Machine Learning
    • Green Tech
  • Environment
    • Biodiversity
    • Climate Change
    • Circular Economy
    • Energy
  • Industry News
    • Entertainment
    • Fashion & Lifestyle
    • Food and Agriculture
    • Health
    • Politics & Foreign Affairs
    • Philanthropy
    • Science
    • Sport
  • Editorial Series
    • SDGs Series
    • Shape Your Future
    • Sustainable Cities
      • Copenhagen
      • San Francisco
      • Seattle
      • Sydney
  • About us
    • Company
    • Team
    • Global Leaders
    • Partners
    • Write for Impakter
    • Contact Us
    • Privacy Policy

© 2024 IMPAKTER. All rights reserved.