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The two dimensions of ESG

ESG and climate change issues have started to take center stage for investment decision making. A recent example is the (currently being developed) EU Taxonomy, which categorizes economic activities according to their contribution to the environment and climate change, with a view to sustainable investment and the implementation of the European Green Deal.

ESG data are indicators for assessing risks and opportunities for companies and a company with a convincing ESG strategy is considered to have less sustainability risk in the medium to long term

ESG data are indicators for assessing the risks and opportunities of companies and a company with a convincing ESG strategy is considered to have less sustainability risk in the medium to long term. This is why non-financial ESG data, i.e. quantitative and qualitative indicators of a company showing its performance on environmental, social and corporate governance issues, are now in demand. Also, there are not a few times when, at the same time with ESG performance indicators also associated risks or opportunities quantified in monetary terms need to be disclosed to stakeholders.

Therefore, the exclusion of ESG elements from the business strategy and, by extension, their non-disclosure, primarily implies the inability to calculate business risk but also the inability to identify opportunities for a company.

This in turn involves business risks, for example:

  1. Exclusion from funding sources and lack of liquidity

  2. Loss of partnerships along the supply/value chain

  3. Loss of revenue due to poor corporate reputation and lack of transparency

But beyond the typical risks, we also see "Opportunities" as a new way of looking at business issues around Environment, Society and Corporate Governance. As such, we can identify:

  • Attracting New Customers and expanding into New Markets that require ESG compliance,

  • Improved financing terms for investments and operations,

  • Participation in research programmes for innovation, with less own expenditure and more State and Community grants,

  • Improved operating costs due to energy savings,

  • Attracting high quality staff regardless of gender, nationality, etc,

  • Competitive staff management, career opportunities for all, fair pay, access to lifelong professional training and qualification, etc,

  • Transparency of the objectives and operation of the enterprise to the community in which it is operating.

At E-ON INTEGRATION we use innovative IT systems that allow the simultaneous collaboration of individual business units and executives within the company for the comprehensive mapping of ESG indicators and their interconnection with other business functions such as Risk Management and Internal Audit.

Read the whole article (in Greek only)


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