Values are changing. Businesses need to live and breathe their principles and show their employees and investors what matters most to them. This can be done through an ESG strategy, which puts environmental, social and governance issues at the heart of their business agenda.
ESG is a growing movement that puts stakeholders at the heart of business operations.
Put simply, whereas CSR embraces the notion of doing good for society, ESG embeds it more deeply within an organization. It recognizes that companies must demonstrate their contributions to ecological preservation and social well-being. And it’s accountable. That means that companies must report back on their commitments and targets.
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The five links are a way to think of ESG systematically, not an assurance that each link will apply, or apply to the same degree, in every instance. Some are more likely to arise in certain industries or sectors; others will be more frequent in given geographies. Still, all five should be considered regardless of a company’s business model or location. The potential for value creation is too great to leave any of them unexplored.
Maximising shareholder value is the world's dumbest idea.
There’s something unbearably sad about a great financial journal like The Economist defending shareholder value theory, which even Jack Welch has called “the dumbest idea in the world." Like many unbearably sad things, it involves clever people who should know better struggling to defend something that is economically, socially and morally ugly.
Perhaps this is a better idea: The purpose of business is to create customer (and get your ESG proposition right).
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