Marcel Kooter: Why Sustainability is Crucial for Corporate Strategy
Marcel Kooter is a senior business leader who works in the oil industry developing commercial strategies. This article will look at the issue of sustainability and the increased importance of ESG in corporate strategy.
According to data from the World Economic Forum, despite the fact that 90% of executives believe sustainability is important, just 60% of organizations have developed their own strategies for sustainability.
It is essential to embed sustainability in corporate strategy to meet evolving consumer preferences and investor pressure, as well as regulatory requirements. In addition, sustainability has also been shown to be a key factor in terms of reducing costs, attracting top talent, and boosting profits.
For organizations to remain competitive and relevant in the current climate sustainability is rapidly becoming a priority, requiring them to transform virtually every aspect of their business. Embracing sustainability as an integral part of corporate strategy.
The acronym ESG (Environmental, Social, and Governance) is a set of standards for corporate behavior used as a measure by socially conscious investors to screen potential investments. Environmental aspects delineate how the company safeguards the environment, including, for example, corporate policies addressing climate change. Social aspects establish a framework for how the company manages relationships with employees, customers, suppliers, and the wider community in which it operates. Governance addresses issues such as corporate leadership, including shareholder rights, audits, executive pay and internal controls.
In the UK, 18% of carbon emissions are created by businesses. Under the Climate Change Act, the country is legally required to reach net zero by 2050.
Huge emphasis is currently being placed on sustainability. According to research from Energy Saving Trust, an independent UK organization, 88% of respondents agreed that it was essential for the UK to meet this net zero target. Today, LinkedIn is brimming with businesses promoting their sustainability wins, with Bill Gates’ book on sustainability reaching the bestseller list in 2021.
By now, most large companies have invested in developing a sustainability strategy, improving operations; reducing, if not eliminating, their carbon output; and gaining the goodwill of ethical consumers. 63% of UK businesses are already introducing new forms of remote working to reduce carbon emissions, with some of the world’s largest corporations making ambitious environmental commitments.
Today, running a business in a sustainable way is much more than just a tick-box exercise. Sustainability has become a pre-requisite to long-term success, with customers, investors, and regulators placing greater emphasis on sustainability, increasing the need for organizations to demonstrate commitment to their long-term future.
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