ESG is the short form of environmental, social, and governmental framework used by organisations to reach their growth. The framework is essential to get a competitive advantage and make the company grow more through a sustainable long-term approach. In the current scenario, top countries like India, the USA, and other European countries are adopting this method to make for sustainable growth. The scenario of India shows the Indian Government is supporting this approach to create a balanced growth of the company by connecting all stakeholders like consumers, regulators, and investors. The report also shows the global ESG market is going to reach approximately $50 trillion at the end of the year 2028. This shows the importance of ESG in the world. Along with that, the business value of any company can be increased by many methods where ESG takes an important stake. Factors like environmental and social factors are getting more attention from customers and other stakeholders of the company. In this place, environmental sustainability, transparency, and strong governance are being valued more and need to be addressed by each company. By addressing these factors with a flexible and strong governing body, the profit margin of the company can go skyrocketing in no time.
Benefits of ESG
ESG Best Practices
ESG, being an essential component for company growth, provides many benefits to an organisation. The main benefit of ESG is the increased transparency and reduced risk in company management. Along with that, it also helps in the financial performance improvement of the specific company. Harvard Business School data shows that companies that use an ESG strategy have experienced 5 to 10% lower volatility during the COVID-19 pandemic. This shows the benefits of ESG in financial performance improvement. Other benefits ESG provides also include employee growth retention where through proper governance employee growth, and talent retention have positive effects on the company. Operational efficiency is another impact created by ESG in organisations for the long term. Operational efficiency helps build a strong performance boost in the company. The social factor of ESG also impacts the operational efficiency and enhancement of the intellectual capital of the company.
Overview of Supply Chain ESG
Supply chain management helps an organisation improve its raw material collection and delivery goods. The supply chain process, when aligned with the ESG framework, can be improved to reach its full potential in the long term. The ESG framework can help in this case by focusing on energy efficiency by reducing cost, getting renewable energy resources, or improving the process by adopting technologies. The supply chain is also responsible for a huge environmental impact due to the production of carbon-related byproducts. ESG framework can help here by reducing carbon footprint and upgrading to more bio-influenced energy sources like solar, biofuel and other related sources. Besides pollution production, the supply chain is also responsible for producing waste that can be managed through the ESG framework. Nielsen Report 2022 states that 73% of global customers are willing to choose products and services that use sustainable supply chains. The model is useful in this case to enhance the company’s relationship with its customers and get a higher brand value in a competitive market.
Value Add of Supply Chain ESG
ESG framework
As per the statement of AnkitaPatwa Supply Chain ESG has a great impact on enhancing the brand reputation of an organisation in the market. Along with that, it is essential to reduce costs and provide them competitive advantage. The practice of ESG in the supply chain supports suppliers’ commitment towards the environment and reduces waste production. However, the importance of the ESG framework is valued after COVID-19 due to a lack of resources. Following environmental, social and governance rules helped the organisations to optimise resource utilisation along with providing them financial benefits. On the other hand, supply chain ESG regulates various supply chain risks hampering customer retention and market reputation.
About AnkitaPatwa
AnkitaPatwa is a leading environmental advocate in India, known for spearheading Foxconn’s Zero Waste to Landfill project, which earned her the Best Environmental Sustainability Leader of 2024 award. An expert in ISO 14001:2015 and ESG frameworks, she drives sustainability in waste reduction, energy conservation, and resource management. She has also published a paper, “A Review of Recycling Methods for Lithium-Ion Batteries”, in the IOSR-JESTFT, highlighting her commitment to eco-friendly innovation.