What is ESG?
ESG stands for Environmental, Social and Corporate Governance. ESG drives decisions and services based around environmental and social issues. It is essentially the way in which businesses, funds and investment models can support and benefit social and environmental causes.
ESG is on both a personal and global scale. On an personal level, people will use ESG to choose where their money is invested based on issues that are important to them, whereas on a global scale, businesses may utilise a percentage of their profits to support causes important to their clients or open an investment fund to ethical investment choices helping clients invest in businesses that they believe in.
ESG has impacted sectors in most countries around the globe, however, the financial industry is arguably the most influential driving ESG, after all, environmental and social causes need financial backing in order to develop and promote change.
ESG evaluates how advanced a business’ sustainability efforts are and is therefore changing the way in which people interact with businesses and how businesses act in regard to the interest of their clients.
As an example, Starbucks promote their ESG model, and it may be changing the way customers engage with them. If ethically sourced coffee and lower plastic waste, recycling-focused food and beverages is important to some people, they are now more likely to buy their coffee at Starbucks than they would have been before they introduced their ESG initiatives. Essentially, ESG is good for the world but there’s no denying that it’s good for your brand reputation too.
What does it mean for Professional Services businesses?
The Professional Services sector is no exception to the changes of ESG. The industry has had to adapt its approach and tailor services and industry decisions towards the environmental and social interests of its client base.
Arguably, there are many aspects of ESG that have improved the Professional Services sector. With a bigger focus on workplace diversity, professional services firms have progressed their HR and recruitment processes to take a fairer and more inclusive approach to hiring people from all different social, ethnic and economic backgrounds.
Many Professional Services firms have taken a huge effort to help improve the environment. Around the world, firms within the sector take a huge proportion of office space, especially in nations like the UK where financial services firms form a huge part of Cities. This opened up the opportunity to introduce reduced plastics in social areas, more accessible recycling bins and eco-friendly travel to work schemes, all of which support wider ESG issues.
To summarise, ESG has taken the world by storm, and it is now viewed as some of the most important letters out there for businesses. Professional Services will continue to adapt and bring forward even more ESG solutions as their client base becomes more and more focused on issues important to them.