Once considered a small factor in the overall economic equation, environmental issues now represent a growing financial risk for businesses. Companies that adhere to an environmental, social and governance (ESG) approach quickly discover the business value of the “E” in ESG.
It’s become so important that some argue an “F” belongs at the beginning of ESG, standing for “financially relevant.”
The “E” in ESG takes into consideration how well an organization acts as a steward of its physical environment, including use of natural resources. This includes both the impact of direct operations as well as a company’s value chain, the full scope of activities required to create and distribute a product or service. It also measures how well a company incorporates these factors into financial and business decisions.