ESG (environmental, social, and governance) certification is emerging as one of the most important requirements for company success. More governments, investors, and consumers, among other stakeholders, are demanding that every business or company act responsibly to help address challenges like global warming and the loss of biodiversity. This responsibility is demonstrated through ESG accreditation.
For a manager or entrepreneur, we must say that ESG or sustainability is the only path if you want to be successful. At Diginex.com, we recommend that you or a member of the corporate management gets ESG certified and ingrain sustainability into the company’s operating structure before it is made mandatory for all companies. For example, the UK has indicated that all companies will be required to follow the Task-force for Climate-Related Financial Disclosures (TCFD) for ESG reporting starting from 2025. Therefore, it is time to go for ESG certification.
Keep reading to learn more about environmental, social, and governance (ESG) certifications for companies and business professionals, including their benefits and how to increase the chances of getting accredited.
Benefits of ESG Certification
The main benefit of ESG certification is that it helps to make your company stand out. Your stakeholders, from investors to customers, will be able to quickly make the decision about investing, buying your products, or associating with the company. Here are other benefits of being certified for sustainability.
- Winning the Confidence of Investors
Most investors are interested in identifying and working with companies that are responsible and committed to sustainability. With emerging studies showing that ESG-focused companies will yield more profits than those not focused on sustainability, it is time to move with speed and adopt eco-friendly operations, and get an ESG certificate online. It is because of this realization that more capital markets are requiring companies to prepare annual ESG reports. One example is the Hong Kong Stock Exchange (HKEX).
The most notable thing about the HKEX ESG requirement is that your company is required to review future risks and opportunities. Then, it has to craft clear strategies for addressing them. It must demonstrate to be truly sustainable and not just for reporting purposes.
This means that investors can easily check the future plans of a company and pre-determine the expected profitability.
- Helps to Increase the Efficiency
ESG certification is provided to a company that has followed the journey of sustainability, and the results are clear, accurate, and verifiable. One impact of sustainability is greater efficiency, which is achieved in a number of ways. Most companies increase the efficiency of their companies through staff training, better production equipment, and changing product design. High efficiency also means that the cost of production will come down significantly.
- The Sure Way to Build Better Attachment to Stakeholders
The primary goal for ESG certification is communicating to stakeholders about your commitment to sustainability. We must say that a good ESG process actually starts the liaison way earlier and progressively nurtures the relationship along the way. For example, ESG reporting requires companies to reach out to stakeholders when determining the material topics to include in the sustainability reports.
The attachment with stakeholders can help make them commit to the organization. Remember to create good channels for communicating with stakeholders. For example, you can create mini-reports and update stakeholders about the progress of different initiatives regularly.
- Good for Compliance
Most governments are installing policies and laws to try and achieve the Paris Climate Accord call of limiting global warming to below two degrees Celsius. ESG certification is only provided when your company demonstrates it is making significant progress toward cutting its own carbon footprint. With this accreditation, it will be way easier to get a new license or permit approval for your company.
It is not just the licensing authorities that are interested in checking the certifications.
Stock markets, professional bodies, and partner companies will also be checking for the certificate.
For example, many are the companies that will decline to work with suppliers not certified as eco-friendly.
These are only a few of the main benefits that you should anticipate, but the list can be way longer. You should also expect to enjoy a stronger brand on the market, more sales, and profits. You have every reason to embrace sustainability.
What You Need to Do to Get ESG Certification
ESG certification is offered by different organizations, and it is up to you to select the one aligned with your operations. Common certifications include the Carbon Disclosure Project Certification, the Commercial Green Building certifications, and the Science Based Targets Initiative (SBTi) certification.
Tips to Help You Get ESG Certified
In the first part of this post, we have highlighted the main benefits that come with ESG certification. So, how do you get certified? Here are the four main things that you should consider:
- Adopt an appropriate ESG strategy: A good strategy should set clear objectives and how they will be achieved in your company. If you plan to cut down on water and energy use by 50%, how will that be achieved?
- Cut down your carbon footprint: Your ESG plan will not achieve much if the company is a top carbon dioxide emitter. Therefore focus on cutting down the carbon footprint by identifying all sources of greenhouse gasses (GHG) and work on cutting them down.
- Invest in the community: The social aspect of your company is very important for it to operate effectively. Therefore, you should prioritize the people, including employees, social groups, schools, and other organizations that can help advance the welfare of the community.
- Support initiatives to regenerate biodiversity: This is another crucial area that you should focus on to increase the chances of getting ESG certification. One of the best ways of doing this is by identifying organizations that focus on forests, wetlands, and other ecological systems restoration.
Report Your ESG Initiative Accurately
Your company will only be ESG certified if it provides the right information about environmental, social, and governance impacts to customers, investment-interested people, and authorities, among others. Therefore, it is important to appreciate that the bulk of the task will involve gathering and analysis. For example, how much emission did the company manage to reduce in its effort to cut down the carbon footprint? Accurately collect the data; it will be a good idea to get the right sustainability software.
At Diginex.com, we have some of the best programs and courses that you can use to get ESG certified. One example is diginexLUMEN, which is used to help manage and mitigate risks in supply chains. It is an excellent tool for collecting standardized and comparable information in all areas, from financial to production and reporting the info with high accuracy. Other highly effective apps or programs that you might want to consider are diginexESG and diginexCLIMATE.
Remember that you can also count on our ESG experts at Diginex.com to learn more about sustainability, implement the right strategies, and get certified. You can never go wrong on ESG with experts and the best tools on your side.
