02 October 2024

Entrepreneurship

Embracing Sustainability: Why Entrepreneurs Need to Know About ESG

What is ESG?

ESG stands for Environmental, Social, and Governance, a framework for evaluating a company's performance on non-financial metrics. It assesses how well a business manages its:

  1. Environmental impacts (climate change, resource depletion, pollution)
  2. Social responsibilities (human rights, labor practices, community engagement)
  3. Governance practices (board composition, executive pay, transparency)

Why should entrepreneurs care about ESG?

  1. Risk management: ESG factors can significantly impact financial performance.
  2. Investor appeal: ESG considerations influence investment decisions.
  3. Regulatory compliance: Governments increasingly require ESG reporting.
  4. Talent attraction: Companies with strong ESG credentials attract top talent.
  5. Brand reputation: ESG performance affects customer loyalty and trust.

 Benefits of integrating ESG into your business

  1. Enhanced long-term profitability
  2. Improved brand reputation
  3. Increased investor confidence
  4. Better risk management
  5. Talent retention and attraction
  6. Regulatory compliance
  7. Innovation and competitiveness

 Integrating ESG into your business

 Conduct an ESG assessment: Identify areas for improvement.

  1. Develop a sustainability strategy: Set measurable goals.
  2. Engage stakeholders: Employees, customers, investors in ESG efforts.
  3. Monitor and report ESG performance: Regularly track progress.

 

Malaysia's ESG Initiatives

 The Malaysian government has launched several initiatives to promote ESG practices:

  1.  National Sustainability Policy: Outlines ESG goals and strategies.
  2. Sustainable Development Goals (SDGs): Aligns with UN's 2030 Agenda.
  3. Bursa Malaysia's ESG Guidelines: Listed companies must disclose ESG information.
  4. Securities Commission Malaysia's (SC) ESG Framework: Guides companies on ESG reporting.
  5. Green Technology Financing Scheme (GTFS): Supports green projects and initiatives.

 Industry-specific ESG considerations

  1. Technology: Energy efficiency, data privacy, digital inclusion.
  2. Manufacturing: Supply chain management, waste reduction, labor practices.
  3. Finance: Responsible lending, investment screening, financial inclusion.
  4. Healthcare: Patient safety, access to healthcare, medical research ethics.

  Common ESG metrics

  1. Carbon footprint
  2. Water usage
  3. Waste reduction
  4. Diversity and inclusion
  5. Employee engagement
  6. Supply chain transparency

 Best practices for ESG reporting

  1. Transparency: Clearly disclose ESG performance.
  2. Consistency: Use standardized reporting frameworks.
  3. Materiality: Focus on relevant ESG issues.
  4. Assurance: Ensure data accuracy.

 

Conclusion

In today's conscious business landscape, ESG is no longer optional – it's essential. Entrepreneurs prioritizing ESG can enhance their reputation, mitigate risks, and drive long-term growth.

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Share your thoughts and insights in the comments, just as I did mine. And let's engage in a respectful and inclusive discussion! 

Until next time,

Venkat V.M. Lingam - Team Lead - Southern Region

  • Director – Scholars’ Alliance
  • International Trainer, Coach & Speaker
  • E.I. Practitioner
  • Enneagram Practitioner
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