NAFA Advises on Environmental, Social & Governance (ESG) Initiatives
Strategies to boost your image by improving your ESG impact
Businesses today are becoming more image conscious, and for good reasons. Their customers are more selective, and they’re seeking out companies they feel are good global citizens. This means adopting practices that benefit the environment, address proper interaction with stakeholders, and provide transparency into operations, all of which have become known as environmental, social, and governance initiatives or ESG. But it’s not just customers who are driving the ESG bandwagon; workers at all levels prefer to work with companies whose values align with theirs. So, if you want to bolster your image with consumers and recruit and retain employees competitively, improving your ESG profile makes sound business sense. The consultants at North American Forensic Accounting PC can show you how.
The demand for ESG comes from many angles
As much as the corner grocer demonstrated that a well-run business is a public service, the Robber Barons of the Gilded Age showed how cruel unremitted capitalism can be. For decades, powerful captains of industry felt free to cheat competitors, deceive consumers, exploit workers, discriminate in hiring and promotions, and pollute our air and water. But during the 1960s, the tide began to change, as legislation reformed business practices and imposed environmental standards. Today, social media and the instant humiliation it can project onto an offending company, has become a potent force for demanding accountability.
As a result, virtually every stakeholder in a business demands some level of ESG:
- Investors want a fair return, but are consciously directing capital to companies who do good, and away from companies with questionable images
- Trade partners who hope to enhance their brand by association with strong ESG companies and avoid backlash from dealings with shady companies
- Consumers seeking to support ethical companies and even punish objectionable businesses
- Employees who expect fair working conditions and want their labor to have greater meaning
When cries for ESG are coming from all quarters, prudent leaders should seek the best advice possible on designing and implementing an ESG program.
Proven benefits of ESG
At NAFA, we believe that good corporate citizenship is noble and desirable in and of itself. But we also understand that the allocation of company resources must serve a business purpose. Thus, the benefits you can expect from an ESG program include:
- Growth — Want to attract more investors, trade partners, employees, and customers? Research shows that stakeholders are more likely to engage with a socially conscious company. The better your image, the better your potential revenue.
- Improved morale — If you want happy, productive workers, start by building a better workplace. Treating your workers fairly and providing them with meaningful tasks also helps recruitment and retention of talent.
- Efficiency — Strong ESG businesses run more smoothly because workers are on board with the core mission and live the company values. Thus, you reduce losses due to waste and fraud, which boosts profits.
- Reduced vulnerability — We cannot ignore the dark side of social activism. There are activist organizations that target weak ESG companies for a quick payday. A strong ESG program insulates you from nuisance lawsuits, boycotts, and other threats.
Additionally, your ESG program might provide tangible benefits to individuals you will never meet.
Components of a strong ESG program
To better understand ESG programs, NAFA recommends guidance from The International Organization for Standardization. Founded in 1946, ISO is an independent, non-governmental, international organization that strives to enhance efficiency, safety, and fairness by developing standards for business and technology.
ISO 26000 Guidance on Social Responsibility delves into seven distinct areas:
- Organizational governance — Are your leadership protocols ethical and socially responsible? Are your officers’ good fiduciaries living the values of your company?
- Human rights — Do your business practices demonstrate respect and support for basic human rights inside your company and in the world at large?
- Labor and employment practices — At the minimum your company must adhere to U.S. labor laws governing issues such as discrimination, sexual harassment, and unpaid overtime. You can go beyond the minimum with initiatives to promote the health and safety of your employees and advance their careers through training and development.
- Environment — The minimal expectation is that you will comply with environmental regulations. Many companies go beyond what is necessary by managing their carbon footprint and promoting sustainability. Many energy saving measures will also reduce expenses.
- Fair operating practices — Companies that do business in developing nations must resist the temptation to exploit low-wage workers, forcing them to labor in foul conditions. Where public corruption is par for the course, businesses must refuse to participate.
- Consumer issues — You must dedicate sufficient resources to provide caring, courteous, and prompt customer service and support. But you must also develop policies that meet consumer expectations in such areas as fair marketing practices, data collection and protection, and consumer privacy.
- Community development — This category covers philanthropy and volunteerism, locally and globally. If you do business in economically challenged urban areas, efforts to elevate the local community and alleviate hardship are key. But to get the best results, you must be prudent in choosing your community partners.
NAFA helps companies tailor ESG programs to align with their values and mission. We also scale programs to an organization’s size. We believe that even the smallest companies can leverage ESG to distinguish itself from the competition.
Contact North American Forensic Accounting PC to develop your ESG program
North American Forensic Accounting PC assists organizations of all sizes that want to design and implement programs for ESG. To learn more, call us at 347-286-4860 or contact one of our offices online to schedule an appointment. Headquartered in Harrisburg, PA, NAFA serves clients throughout the United States, including in Philadelphia, Pittsburgh, New York City, Atlanta, Charlotte, Miami, and the Tampa Bay Area.