ESG is a hot topic in Australia at the moment. From bills aimed at legislating mandatory reporting for large financial enterprises, to government pledges for net zero emissions and preparation for the forthcoming COP28 conference, it can be all too easy to become lost in jargon, acronyms and abbreviations. 

However, these high-level discussions about ESG do demonstrate its relevance and importance. They suggest that businesses of all sizes should consider their ESG practices or risk losing out to competitors who are ahead of the curve.  

While ESG literature and articles largely focus on huge multi-national corporations, we’ll bring it back to basics and explore why ESG is critical for organisations of all shapes and sizes to thrive in today’s business, social, and political landscapes. 

 

Listening to those who matter 

A report from PwC reveals that 83% of consumers believe companies should actively promote ESG practices. Furthermore, an overwhelming 86% of employees prefer to work for companies that align with their own personal values. These statistics underscore the growing importance of ESG credentials in the eyes of consumers and the workforce…do you think they want to be ignored? 

Enhancing reputation and brand value 

SMEs can enhance their reputation and brand image by integrating ESG principles into operations. Consumers are becoming increasingly conscientious about supporting companies with ethical and sustainable practices and aren’t afraid to call out those that don’t. By showcasing a commitment to environmental responsibility and social values, businesses of all sizes can cultivate a more loyal customer base. 

Boosting the bottom line 

Setting and achieving ESG goals can lead to significant cost reductions. A simple step may be to look at implementing energy-efficient measures to reduce your carbon footprint, which will directly result in lower utility bills. It’s a win, win if you ask us! 

Measures like energy-efficient lighting, reduced water consumption, and sustainable sourcing will all contribute to tangible cost savings. Cost savings that can be reinvested in the business, making it a smart financial move for SMEs. 

A study from the Ethics Centre also found that companies who improve their ethical perceptions can increase their returns by approximately 7%. Simply put, a poor ethical reputation will damage your financial outcomes.  

Attracting talent and enhancing productivity  

Sustainability is not a passing trend; it creates value for your business. A worthwhile practice is to align your social strategy with the values of your employees – ask them what they think! This fosters a sense of value, support and advocacy among your workforce, which will lead to greater productivity and results. 

ESG initiatives can also help SMEs attract and retain top talent, especially when looking towards the younger generation who actively seek employers that care about what they care about. By demonstrating a commitment to social responsibility and ethical governance, your business will be more appealing to potential employees, giving you that edge over competitors. 

Ensuring long-term success 

The business landscape is constantly evolving and, while mandatory ESG reporting for large financial institutions may be imminent, it’s not a far-fetched idea that businesses of all sizes will be bound by this in the not-too-distant future.   

Embracing ESG practices now can mitigate risk, position your business ahead of future compliance requirements, and demonstrate a dedication to a better future. This trifecta is a recipe for long-term success. 

Has this got your brain ticking? If it’s time to shout about your ESG credentials or you need support with developing a starting strategy, give our dedicated ESG team a shout at esg@weareliquid.com.