Why ESG matters for your business too ...

Business has long ceased to be just about profits. Driven by regulations and customer expectations, more and more attention is being paid to the role companies play in society and the impact they have. In the context of international climate agreements, companies are, for example, expected to take action to tackle climate change. The European Green Deal responds to this and has the ambition to have the EU play a leading role in the transition to a more sustainable society with fewer carbon emissions and a more circular economy.

In addition to that sustainability transition with a focus on the environment, the Sustainable Development Goals were formulated under the impetus of the United Nations. These 17 objectives for sustainable development are much broader: besides climate change, they aim to combat - among other things - global poverty and hunger, ensure better and accessible education, gender equality and clean water, as well as build safe and inclusive cities and ensure a sustainable and innovative economy.

Mission and purpose become more important

At the same time, consumers are becoming ever more articulate and critical. A young generation has emerged that expects policymakers and companies to take responsibility in making the world a more sustainable place. One can no longer attract new talent merely with an attractive job content and a nice salary package, but equally through their mission and "purpose": how do we, as a company, contribute to a better world?

It makes us face the facts, especially in a time where successive crises have shown that a globalizing economy is no longer the be-all and end-all. It is no coincidence that reshoring (bringing operations back from abroad) and a short-chain approach are picking up in times of geopolitical tensions, resource scarcity and disrupted supply chains. Doing business in a more sustainable way is now equal to mitigating or avoiding risks.

Take charge yourself

Being aware of the issues is one thing, creating a responsible ESG policy and taking action is another. But it pays off. If you start thinking about your ecological footprint, about social policy and treating people with respect, and about good governance that acts ethically and responsibly, you will not only identify the risks but also see the opportunities. In the long run, a company surely reaps the benefits: through cost reductions, a better image or in attracting new customers.

Therefore, we advocate to take charge as a company: put an ESG strategy on paper, establish an action plan and create a culture of transparency that encourages everyone to help think about the impact you can generate as a company. In fact, in most of the companies we help do just that, we find that a lot of good initiatives are already in place, such as a plan to use energy more consciously, a policy that encourages training and personal development, or transparent communication from management to employees ... We certainly don't need to reinvent the wheel.

European requirements affecting SMEs

Such a proactive approach has the advantage of allowing you to determine what is most important and what you want to tackle first. It can also help you prioritize in new investments. Or you discover opportunities for innovation. And in particular: you will be prepared for what is to come. After all, in the coming years, more and more companies will be required to report on their ESG policies and results.

To this end, the European Union has issued two directives on Sustainability Reporting and Sustainability Due Diligence. These regulations are primarily intended for listed and large companies, with more than 250 employees or more than 40 million euros in turnover. But as they will also start mapping the impact of their value chain (think of scope 2 and scope 3 in carbon emissions), pretty soon SMEs supplying products or offering services to such companies will also face questions about their ESG approach. Moreover, these regulations will expand year after year, so that more and more SMEs will have to report.

Knowing this is on the horizon, it is better to be prepared and already have a strategy, an action plan and a methodology for reporting results ready. It will save you a lot of stress and wasted time later on.

Do you want to know more about ESG policy and how Moore can help you? Get in touch.