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The rise of Environmental and Social Governance (ESG) and what it means for your business

A recently published report has found that nearly two-thirds of firms see the climate emergency and the reputational impact of not taking action are key drivers for energy efficiency projects.

ESG is a new term that business leaders may not have heard yet, but it’s making a big impact in the investment market, and where finance leads others will follow. 

ESG stands for Environmental and Social Governance, it represents a set of standards that will be applied to assess businesses on their net contribution to climate change prevention and to the wider society, and the momentum building around this idea is a sign of greater change to come. 

For example, at the start of 2021, BlackRock, the behemoth investing firm, and by far the largest money manager in the world, announced that environmental sustainability was now a core goal for the company and that a “tectonic shift is coming”. They began driving investors towards sustainable enterprises, and where BlackRock goes others will follow, driven by huge financial opportunities. 

Similarly, as COP26 came to its close, we saw Rishi Sunak take to the stage to announce that the largest firms in the UK will be forced to publish their net zero strategies.

“At least 80% of the global economy has committed to net zero or carbon neutrality targets. Our challenge now is to deploy the investment we need to deliver those targets around the world. This means we are going to move towards making it mandatory for firms to publish a clear, deliverable plan…”

Chancellor Rishi Sunak MP

Here’s the rub. If larger firms are doing it, eventually the whole business ecosystem will too, because the policies of the biggest firms eventually impact businesses at every level of the supply chain, including SMEs. 

Moreover, once larger businesses begin to face more rigorous and public scrutiny of their net zero strategies, other businesses who are part of their supply chain will need to prove they are doing everything in their control to reduce their CO2 emissions too. Otherwise, they may lose business. 

It’s also clear that many organisations are already catching on to this new trend, as a recent report from EEVS has shown. Nearly two-thirds of businesses surveyed claimed, their reputation in the face of the climate emergency has driven them to make energy efficiency upgrades to their premises, the most popular being energy efficient lights. 

As more rigorous standards are enacted to examine the green credentials of your business, ESG will be the measure that shows investors, customers and stakeholders that you are making a net-positive contribution to society and the environment. 

If you’re looking for a way to reduce the carbon emissions of your business, and you have premises in Oxfordshire you may want to get in touch with the Energy Solutions Oxfordshire team. 

You can also use the Free Diagnostic Tool to see what changes you can make to cut your energy bills and make your offices more comfortable for your customers.  

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