The Growing Importance of Environmental, Social, and Governance (ESG) Issues

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The Growing Importance of Environmental, Social, and Governance (ESG) Issues

Environmental, Social, and Governance Issues – a criteria used in current times to evaluate the influence of a business or company on its surroundings. The company is not just meant to generate profits but has a certain obligation to fulfill towards society and the environment in return for using its resources. In the bigger picture, it forms an ecosystem of its own, and every action reacts to the overall surroundings. 

Dive deeper to know more about the issue and its importance.

What are Environmental, Social, and Governance (ESG) Issues?

A company builds an interrelated network, connecting employees, shareholders, government, and the local communities. The actions taken by the company affect society and the environment on a great level in the long run. Environmental, Social, and Governance (ESG) issues are a standard for measuring such impacts.

Environmental issues address and analyze the company’s footprint on the natural environment. The rise in global warming and the destruction of biodiversity draws attention to the need for companies to take thoughtful steps. 

Some of the common problems that contribute to change in the natural environment around a company are air pollution, carbon dioxide emission, water pollution, etc. For example, British Petroleum, a multinational oil and gas company, experienced a severe environmental disaster when the oil spill in the Gulf of Mexico occurred. The massive release of oil into the ocean, which lasted for 87 days, harmed marine life to a great extent. Not only biodiversity but also the business cargo crossing through this path was intensely affected. 

Social issues address and analyze the diplomatic relations of the company. A company is bound to follow human rights practices and labor laws. The exploitation of workers and customers, unethical sales of goods, etc, comes under the social issues of the company.

For example, a report showing disparity on the basis of gender was released by Google back in 2014. Women comprise only 30% of the total workforce, which highlights social issues. This highlights the prevailing social issues that need attention. Addressing social issues requires establishing equality. 

Governance issues address and analyze the regulatory compliance that a company is supposed to follow. The strength of a company lies in building a strong base by following government rules and regulations to avoid any major legal issues. 

For example, a well-established company, Volkswagen, was found using software called “defeat device” to trick the emission test and adjust according to compliance to show inaccurate data in 2015. This is a clear case of unethical practice for short-term profit. This was against government regulatory compliance.

Importance of Environmental, Social, and Governance (ESG) Issues

The importance of Environmental, Social, and Governance (ESG) Issues has increased over the years since the companies are focusing on short-term benefits rather than understanding the need to follow ethical practices. Profit maximization should not be done at the cost of damaging the environment, exploiting employees, or crossing the legal boundaries set by the government. 

All the factors, such as social, environmental, and governance, play a very important role in the long-term success of the company and in establishing a brand name and reputation. A company cannot sustain itself without fulfilling the needs of the people working for the company, i.e., employees, people consuming their goods and services, i.e., customers, and the government. Following a good and ethical path will lead to a reduction in risk, decrease pressure from the government, increase brand value, and help in maximizing profits. 

The company gets benefits as the investors use the ESG criteria to estimate the growth and stability of the company before investing. Consumers also pay special attention before availing of the offers provided by the company to avoid any damage or risk. They are attracted to the commitment of the company and the unfazed reputation. Even employees like to work in a company where equality is served rather than combating social discrimination in their work life. The employees are motivated and loyal by the impactful social measures taken by the company. 

Also, various benchmarks evaluate companies based on such factors and rank them accordingly. It brings a sense of achievement if a company follows good practices and ranks in metrics like Sustainalytics, etc. It shows that the company is not operating for the sole reason of earnings but also a sense of responsibility. 

Understanding the importance of environmental, social, and governance (ESG) issues will help the business overcome all potential challenges, such as a disrupted supply chain, disappointed investors, and unhappy customers. All these guidelines are not just for society and the environment but also for the company to get the ultimate profit in terms of monetary gains and an elevated reputation. It ensures long-term stability and safeguard the original value of the company. 

The Rushford Business School on Importance of Environmental, Social, and Governance (ESG) Issues

The Rushford Business School equips graduates with the much-needed insight in the business world. We believe in teaching our graduates the importance of ESG criteria and contribute to their overall learning. Anyone can start a business, but sustaining and expanding it requires a lot of factors. We promote the creativity and innovation of each student and give them a free environment in which to thrive and later modify it according to the dynamic business world.

The first step to solving a problem is to identify it. Our curriculum is designed in such a way that graduates learn to identify the environmental, social, and governance issues and then later work on their solutions. We promote sustainability and a cleaner and greener future. Our graduates know the importance of growing the business without tampering with the natural surroundings. 

Rushford Business School also develops a sense of duty within the graduates so that when they become leading entrepreneurs, they are well aware of their responsibilities. Rushford MBA graduates are taught in such a way that they inculcate the feeling of working on creating meaningful change in the social setting. Community engagement programs, etc., will help the business build a reputation and build trustworthiness among the people. One of the most prominent ways of teaching our graduates about ESG issues is to give them real-life insight and connect them to the incidents around them through case studies. This method is really useful since they learn to identify the problem and analyze what exactly went wrong and how to avoid it.

We pay special attention to teaching and include all the important governance practices and laws in our curriculum so that our graduates follow the path of ethical practices and values in their work lives. The graduates are taught in such a manner that they do not get culture shock in the real business world outside the campus. We try to reduce the gap between bookish knowledge and actual corporate life. Rushford Business School works hard to transform graduates into future business tycoons with all the values and commitment required.

The Conclusion 

The bottom line is that even though a company operates to maximize its profit, following the ESG criteria is very important. It ultimately leads to a stable business and commendable growth. The retention of employees increases, and the statistics reveal that overall productivity also increases. Companies should pay attention to making their employees happy since they are the ultimate work-doers. They are the backbone of the company and contribute to its success. Similarly, government has a very important role to play in the establishment and flourishing of a company. A company can cease to exist if found indulged in unethical practices.

Rushford Business School does not set unexpected benchmarks for its MBA graduates in terms of tackling ESG issues, but it helps them with well-defined pathways that will lead them to ultimate success. We practice sustainability and inclusion by welcoming diversity and adherence to government laws before teaching it to our graduates. We believe that student must witness it first, realize its importance, and then adapt it in their lives. We need collaborative support from our graduates as well as faculties to continue our culture of establishing excellence and learning about ESG issues in the dynamic business world. 

So, environmental, social, and governance (ESG) issues are growing in importance to make a business more accountable for its actions. The issues are not an individual concern but a global one. We put in a collaborative effort to educate the graduates from the very basic to keen details about a successful business venture. Rushford MBA programs are an excellent choice for making the most out of the degree. The curriculum and the culture and environment that we provide for our graduates are amazing. Our graduates know the importance of change and are always ready for it. Since the world is shifting towards sustainable living and a good work-life balance that is important to mental health, our future leaders are taught to take business to new heights by keeping these factors in mind. 

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