ESG

21 November 2024
ESG

In the face of climate change, growing social awareness and the need for ethical governance, there is an emerging need to set new standards for how companies operate. ESG is the actions implemented by a company through the lens of its environmental (E), social (S) and corporate governance (G) impacts. The aim of this initiative is to promote sustainability and social responsibility in the wider business community. In line with this, companies seek to strike a balance between generating profits and caring for the environment. The obligation for companies to report their ESG activities will be gradually extended, depending on the size of the entity and the specifics of its operations. Starting in 2024, the obligation will cover companies with more than 250 employees and by the end of 2027, it will also cover small and medium-sized enterprises with more than 10 employees. The purpose of this article is to show that the importance of sustainability continues to grow and ESG issues are becoming a key area of focus in business [1].

ESG indicators

The three ESG areas mentioned above—namely environment, society and corporate governance—are an integral element necessary to be taken into account by companies that care about their image as socially responsible organisations. Effective management of each of these areas, through companies taking specific actions related to them, is key to achieving this goal. A fundamental action to be taken is monitoring, which allows awareness of the intensity of the impact exerted in each area.

Environment

To effectively monitor the impact on nature, consideration should be given to areas such as:

greenhouse gas emissions,

energy consumption,

carbon footprint,

hazardous waste production,

emissions (such as substances or noise) to the environment,

emissions to the aquatic environment.

Society

In order to effectively monitor relations with employees, customers, investors and the local community, it is important to consider areas such as:

supporting diversity,

minimising disparities,

ensuring work-life balance,

respecting employee rights,

ensuring employee safety.

Corporate governance

In order to effectively monitor how the management board operates, the following areas should be taken into account:

fiscal transparency,

countering corruption,

structure of the management board,

remuneration for the management board and employees,

respect for shareholder rights [2].

Fig. 1. Graphic showing ESG indicators
Source: https://www.iberdrola.com/about-us/esg-responsible-management

Impact of ESG on companies’ operations

ESG issues have a significant impact on the actions taken by companies and their strategies. Operating a sustainable and conscious business is now a necessity in order to maintain a leading position in the market. Implementing an ESG strategy brings with it a number of valuable values for a company, as outlined below.

Increased customer loyalty

Companies that actively engage with environmental, social and corporate issues build a bond of trust with their customers. Customer loyalty increases as consumers are more likely to support companies that take action for social and environmental good.

Improving the image

ESG-compliant actions build a positive corporate image in local communities, among customers, investors and business partners. A company that cares about the environment, supports local communities and applies high ethical standards is seen as a responsible actor and a reliable partner that cares equally about social and environmental well-being.

Stable market position

Companies that effectively implement ESG strategies can enjoy a more stable position in the market. By integrating environmental, social and corporate factors into their operations, the company minimises the risk of reputational crises, which translates into operational stability and long-term growth [3].

Innovative Technologies and the Achievement of Sustainable Development Goals

Technologies such as Artificial Intelligence, Big Data and Blockchain are effective tools for monitoring and understanding an organisation’s social and environmental impact. Artificial Intelligence, used in data analysis, enables the identification of consumers’ needs, which allows companies to understand them better and plan in advance the necessary actions to be taken. Big Data analytics, on the other hand, makes it possible to process and analyse extensive data sets, enabling more “targeted” business decisions based on the non-obvious information contained in this data. Blockchain technology, on the other hand, ensures the security and immutability of data, which is key to ensuring transparency in business processes. By using these technologies, companies can develop effective sustainability strategies, taking advantage of the opportunity to digitise and automate business processes. As a result, companies can create business models that not only generate profits but are also socially responsible and environmentally friendly. Moving towards the use of advanced technologies in the area of ESG is becoming not only a trend, but also a necessity for companies wishing to be leaders in sustainability [3, 4].

ESG at BFirst.Tech

BFirst.Tech considers sustainability one of the most essential elements of the company’s strategy. With many innovative, proprietary and environmentally friendly products, we are able to meet our customers’ needs. For the second decade BFirst.Tech has been setting the standard for solutions in reducing noise pollution in working environments and urban agglomerations, generating, aggregating and providing management information (including data for non-financial ESG reporting) and monitoring and analysing information on the state of the industrial infrastructure of companies. As we are aware of the climate changes taking place, it is environmental activities that are particularly important to us, which is why we focus on them when building the company’s strategy.

Summary

ESG is a key element in building the long-term value of companies in contemporary business. Implementing an effective ESG strategy allows companies to positively influence environmental protection, stakeholder relations and governance within the organisation. It also carries a number of precious values for the company, such as a more lasting relationship with customers, an increase in the company’s reputation, or a strengthening of its position in the industry. Thus, by implementing ESG, a company can become an indispensable part of the environment positively affecting the quality of life of the community.