Freelancer Value Proposition
Mastering ESG Integration for Consultants and Companies
Written by: Flexing It
22/10/2024
6 minutes read
![eye]()
5
![share]()
0shares
As the ESG (Environmental, Social, and Governance) becomes more critical to businesses globally, both companies and ESG consultants must stay on top of things.
This guide covers the latest industry trends and essential sustainability skills, focusing on integrating ESG effectively.
Key Industries Leading ESG Demand: Opportunities for Companies and Consultants
Globally, the demand for ESG initiatives is growing across several sectors. According to an EY report, 74% of institutional investors are more likely to invest in companies with a strong ESG profile.
Specific industries are leading this shift:
- FMCG: Sustainability is a growing consumer demand in the FMCG industry. A 2022 study by Nielsen found that 81% of global consumers feel strongly that companies should help improve the environment.
- Manufacturing: The manufacturing sector has been pressured to adopt energy-efficient and low-emission technologies. McKinsey estimates that sustainable manufacturing practices could reduce global emissions by up to 45%
- Oil & Gas and Petroleum: Given their high environmental risks, oil and gas sector companies are increasingly adopting ESG measures.
- Renewable Energy: The Indian government's push for renewable energy has created significant demand for ESG compliance in this sector. In 2023, India ranked as the third-largest renewable energy market globally.
- Transport (EV Emergence): The electric vehicle (EV) revolution has accelerated ESG adoption in the transport sector. Bloomberg forecasts that EVs will account for two-thirds of new car sales by 2040 .
Integrating ESG into Business Strategy: A Collaborative Approach
ESG consultants and companies must work together to integrate ESG principles into core business strategies.
A structured approach ensures long-term success:
- Leadership Engagement: Companies must engage their leadership teams in prioritising sustainability, and consultants can guide them in securing executive support.
- Materiality Assessment: A materiality assessment helps companies focus on the most impactful ESG factors. According to a report by KPMG, around 71% of the world's largest 250 companies now perform materiality assessments , making this a critical tool for ESG consultants.
- Annual Goals and KPIs: Setting clear goals and key performance indicators (KPIs) allows companies to measure their ESG progress. Consultants help companies map these goals, ensuring alignment with broader business objectives.
- Cross-functional Collaboration: Success in ESG requires input from multiple departments, which can increase the effectiveness of ESG initiatives.
- Certification and Audits: Third-party certifications (SASB, GRI, TCFD) validate ESG performance.
Long-term Financial Benefits of ESG for Companies
For companies, the long-term financial benefits of investing in ESG are clear:
- Cost Savings: According to McKinsey, companies that invest in ESG can see operational cost savings of up to 60% due to improved efficiency.
- Tax Benefits: Governments worldwide are offering tax incentives to companies that meet specific ESG criteria, such as carbon credits and renewable energy investments.
- Risk Management: ESG-aligned companies are less likely to face fines, or environmental penalties.
- Investor Attraction: Companies with strong ESG profiles experience higher investment interest .
Future ESG Trends: What Companies and Consultants Should Prepare For
As both companies and ESG consultants look ahead, specific trends will shape the future of ESG:
- Stricter Regulations: The Indian government is enforcing stricter ESG compliance, requiring companies to disclose their ESG practices.
- Upskilling for Compliance: Companies will need to continuously train their workforce to stay compliant with the latest ESG regulations, with consultants helping bridge the knowledge gap.
- Focus on DEI: Diversity, Equity, and Inclusion (DEI) are becoming central to ESG, with companies prioritising more inclusive workplaces.
- Sustainable Supply Chains: Supply chain transparency is increasingly important for businesses to remain competitive.
Whether integrating ESG into your business strategy or advising clients on their sustainability journey, understanding these emerging skills and data-driven insights will help you lead the way to a more sustainable future.
5
0shares
