Environmental, Social, and Governance (ESG) is an evolution of corporate sustainability and responsibility. It has become a key metric for determining the longevity of a company, from major corporations to startups. Technology companies, in particular, can benefit from ESG practices. Here are the five ways that ESG can increase valuations and revenues in the tech industry.
ESG is a familiar approach around the world, and a commitment to the practices helps develop a trusting relationship between the technology company and potential stakeholders. When you can demonstrate that your focus goes far beyond revenue to the well-being of the people and places you operate, you are more likely to gain trust and cooperation from governing authorities and communities in general.
Too many times, cost-effectiveness equates to cutting corners. ESG helps your technology company find ways to become more cost-effective without losing sight of your original mission or the trust-based relationships that you have built. ESG is proven effective for countering rising operational and other costs. You can produce the same quality product for a lower cost when you integrate ESG into your operations.
Minimize Legal and Regulatory Issues
Legal and regulatory issues are costly to any company. Adhering to your commitment to ESG as a part of normal operations reduces the likelihood of legal and regulatory issues. Many companies even find that ESG-based operations give them more freedom from a strategic standpoint because government regulators support those who demonstrate a commitment to ESG.
Employees at all levels want to have a sense of pride in their work each day. By sharing your vision for an ESG-based tech company, you garner a new level of support from your employees. This translates into higher productivity because they feel as if they are contributing to a much greater picture than their day-to-day jobs.
Return on Investments
ESG practices have also proven beneficial to returns on capital investments. By choosing capital allocations that support the ESG-theme of your tech company, you will see better long-term results. This translates into higher returns on your investments. Using ESG also helps you decide which capital investments should be avoided based on long-term barriers based on the pillars of ESG.