Role of Environmental Social and Governance in Post Pandemic Recovery Strategies

INTRODUCTION:

COVID-19 has changed the perspective of the world leaders. Many parts of the world are still dealing with the repercussions of COVID-19 pandemic. This has led to an increased importance for the more sustainable & resilient recovery strategies. The answer to this is the new framework that has emerged in recent years, ESG or Environmental Social and Governance Framework.

Through this blog post, we will try to help you explore the importance of Environment Sustainability, Social Equality & Corporate Governance in building a better future and a profitable business. This new ESG framework provides a guiding principle for businesses, corporates, stakeholders, investors and policy makers.

Environmental Social and Governance Framework

ESG Framework is a holistic approach that incorporates all the critical parameters impacting the environmental and social well being of the organization. In today’s fast moving world, the organizations and big businesses are facing innumerable challenges because of climate change and social inequality, which is resulting in a shift in consumer’s expectations. To mitigate these uncertainties, a large number of organizations are moving towards ESG frameworks. Environmental, Social & Governance (ESG) considerations have emerged as a guiding principle for these organizations and are helping them in moving towards a sustainable growth.

ESG goes beyond traditional financial metrics, recognizing that economic success can be achieved through balancing environmental stewardship, social responsibility, and ethical governance. In this introductory blog, we will deep dive into the core components or pillars of ESG, their significance in today’s landscape and their potential to transform the world into a more resilient, sustainable & equitable society.

In the world of sustainable investing and corporate governance, Environmental, Social & Governance (ESG) have emerged as the statutory compliance for all the big and small businesses. The three pillars of ESG namely: Environmental Consideration, Social Responsibility and Governance Excellence represents the foundational element upon which the businesses can build a more sustainable and responsible future. 

  1. ENVIRONMENTAL CONSIDERATION:
  • The pandemic has shown a profound linkage between human health and health of the planet. ESG framework offers a complete roadmap for integrating environmental prospects with the recovery strategies of the companies.
  • The first pillar of ESG, namely Environmental Consideration, focuses on organization’s various processes and their impact on the well being of the environment.
  • Some of the key strategies that are included in this pillar are:
    • Resource Conservation through renewable energy investment
    • Climate change mitigation
    • Greenhouse Gas Emissions calculation
    • Minimizing ecological footprints like Carbon Footprint & Water Footprint 
    • Energy efficiency
    • Waste Management
    • Life cycle assessment
    • Biodiversity Conservation, etc.
  • Companies are increasingly judged by the efforts they are putting into implementing the above strategies. 
  • As the impact of climate change is becoming increasingly evident, organization’s are required to adapt to the evolving environmental landscape.
  • Prioritizing environmental sustainability can drive economic growth while mitigating climate risks and preserving natural resources for future generations.
  • ESG framework provides tools to assess and mitigate environmental risks such as carbon emission, water scarcity, natural resource depletion, global warming, supply chain disruption, etc.
  • By embracing sustainable development initiatives such as adoption of renewable energy and waste reduction techniques, organizations can enhance their resilience to environmental shock while minimizing their ecological footprints. 

  1. SOCIAL RESPONSIBILITY: 
  • Social responsibility means that along with maximizing the profitability of the organization, employers should operate in a way that benefits the society.
  • The pandemic has worsen the existing social inequalities depriving marginalized communities of the basic necessities.  
  • Due to COVID19, the disparities in the access to basic social needs such as healthcare, education, economic opportunities, became quite evident to the whole world.
  • ESG framework provides different strategies to address these disparities and to combat the social issues such as labor rights, hunger, malnutrition, good health and well being, quality education for all, diversity and inclusion, sanitation, decent work and economic growth.
  • Companies today are being evaluated based on their efforts to promote fair labor practices, foster inclusive work culture, support local communities, and uphold human rights throughout their supply chain.
  • By working towards these social issues organizations can build the trust of consumers, employees, and stakeholders. This will in turn enhance the goodwill and reputation of the company in the social market.

  1. GOVERNANCE EXCELLENCE:  
  • Corporate Governance is the system of rules and regulations through which a company is directed and controlled.
  • Effective governance policies are essential for the growth of the organization especially after COVID 19 pandemic.
  • ESG framework emphasizes  on 4 major pillars of Corporate Governance namely: Accountability, Fairness, Transparency and Independence.
  • The governance pillar of ESG focuses on board diversity, executive compensation, shareholders rights, transparency, and ethical leadership. Ethical leadership plays a vital role in sustainable development of the organization.
  • Companies nowadays are being assessed based on the strength of their corporate governance structure, ethical conduct and accountability mechanism. All these parameters are essential for maintaining the trust of the investors, shareholders and society.
  • Strong corporate governance not only enhances the trust of the present employees but also enhances the resilience to future crises and lays the foundation for long term success.

CONCLUSION:

In a world defined by unprecedented global challenges like COVID 19, economic recession, climate change, ESG has emerged as a powerful tool for driving positive change and building a long term successful economy.

ESG principles present significant opportunities for innovation and value creation in the post COVID era. Companies that are prioritizing ESG framework for sustainability and social responsibility can gain the competitive edge, attract investors’ trust, and drive positive social impact. Investors are increasingly incorporating ESG criteria into their decision making processes, recognizing the financial risks and opportunities associated with the investment.

ESG represents a shift in the mindset of the society as to how the success of the corporate is measured. Earlier financial profitability was the only criteria that determined the success of any venture, but as ESG continues to grow, its influence will extend far beyond financial profitability and compliances. 

As we are moving forward into this post pandemic world, the integration of ESG principles into recovery strategies offers a roadmap for building back together. By incorporating ESG goals, companies can drive innovation, enhance operational efficiency, and create a sustainable supply chain. Companies that are prioritizing ESG initiatives are at a better position to adapt to future challenges, mitigate risks and create value for stakeholders.

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