Without compliance with ESG criteria, it is becoming increasingly difficult for medium-sized companies to attract customers, investors and new employees and to convince banks. However, many questions arise when it comes to the concrete fulfilment of ESG factors. The overarching issue is to take the right approach to ensure that the ESG criteria are optimally integrated into one’s own business strategy and play their part in ensuring that the company acts responsibly and thus remains viable and competitive in the future.
ESG & EU Taxonomy: Why Corporate Sustainability is becoming increasingly important
ESG stands for “Environmental, Social, Governance”. The ESG criteria help investors to assess the sustainability risks and opportunities of a company. They are closely linked to the EU taxonomy. The aim of the EU taxonomy is to steer capital flows towards sustainable investments and to promote the financing of the EU sustainability goals. ESG criteria have been defined for implementation. These are assessed by means of ESG reporting, which is based on the non-financial reporting guidelines. A transparent presentation of the three essential sub-areas E, S and G with all risks, processes and results is required.
Environmental Management as one of the three ESG Pillars
In order to bring more transparency to this large number and complexity of topics, we will devote this article to the area of “Environment”. In the context of ESG requirements, “environment” refers to the impact an organisation has on the natural environment. How does the company deal with environmental issues? What measures are taken to reduce or prevent negative environmental impacts? The sub-areas are subdivided into many sub-areas such as energy consumption, the use of natural resources, emissions or waste. Depending on the size of the company, the sector and the location, the solutions in the area of environment can look very different for medium-sized companies, from circular economy to e-mobility. An in-depth analysis of the current and future environmental aspects relevant to the company is the basis for the individual roadmap in the area of environment as part of a holistic ESG strategy.
More efficient, more economical, more innovative: E for Environment in Practical Implementation
Environmental criteria can be implemented in many areas, for example:
- Energy and resource efficiency by using new technologies, optimising production processes, promoting the circular economy or using renewable energies.
- Reducing greenhouse gas emissions, for example by using sustainable transport or avoiding waste. And this along the entire supply chain.
- Environmental management and compliance ensure that environmental impacts and performance are regularly monitored, evaluated and improved.
Many Advantages arise for Companies from the Implementation of the E-Criteria:
- Sustainability: Customers today are sensitised to the topic and pay attention to sustainability criteria. By fulfilling environmental factors, small and medium-sized enterprises gain a competitive advantage. New business models can also emerge that open up access to new markets. In addition, companies can conserve resources and possibly reduce their costs through the use of sustainable energies. If, for example, existing materials are recycled, this replaces the purchase of new materials. Or they can reduce their energy costs by using energy-efficient machines and technologies.
- Legal requirements: Environmental regulations are becoming stricter in many countries and regions. A medium-sized company should ensure that all standards, relevant laws and regulations are met. With a holistic ESG strategy that takes into account all important environmental factors, it is prepared for economic, social and political developments and creates a stable basis for itself. This avoids the risk of environmental violations, which often result in severe fines and corresponding penalties.
- Image: How a company positions itself in the area of environment has a great influence on how it is perceived by stakeholders. A responsible and dutiful approach to environmental issues strengthens stakeholders’ trust in the company. With a clear communication about the fulfilment of environmental criteria towards its customers, investors and employees, a company meets the high expectations and diverse needs.
THE MAK`ED TEAM analyses with a sustainability check how the individual ESG strategy looks like for a company. In this context, taking responsibility for the environment is a duty – and properly implemented an important driver for economic success.