ESG Reporting: Why Investors Need Tracking Technology

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As we enter an era of large-scale shifts in climate, political unrest, and amidst a global pandemic, companies are doing their part in engaging in environmental, social, and corporate governance (ESG).  These are solutions that implement factors that measure sustainability and social impact by engaging or supporting volunteering ethically oriented practices.  Businesses have begun to turn to ESG to make a difference in the community which helps build a positive reputation for the company.

Why Investing in ESG Matters

Investing in ESG matters now more than ever because it allows companies to equally weigh environmental and social concerns with the core of business processes for long-term sustainability.  This goes beyond adding on an initiative as a marketing tactic, because businesses have the power to enact change within marginalized communities and the environment.  According to a study conducted by BofA Global Research, investors that invest in companies with above average social and environmental rank, have been noted to avoid over 90% of bankruptcies.  These companies with ESG tactics have been found to perform better financially, than those who do not engage in environmental and socially-driven concerns.

How ESG Reduces Risk

There are several risks that can put a companies success at stake, that ESG investing could have avoided.  When a business has poor worker treatment, this can lead to unhappy and stressed employees that do not value the companies business and brand.  They are more likely to quit their jobs and contribute to a higher turnover rate, which ultimately causes the company to spend much more money on the hiring, training, and onboarding of new employees.  When you analyze this outcome in comparison to companies that excel in engaging their employees, you can see that employees have a higher rate of positive engagement with customers and clients, higher productivity, and higher profitability.

Companies that are known to have low diversity can also have negative impacts on their success, as they are losing valuable perspectives and intellectual capital.  This discrimination can be shown in the form of gender, race, or even across various workforces.  Companies that actively seek out diverse candidates have higher growth rates and are more likely to generate financial returns above the national medians for their industry.

Another mistake that could easily be avoided through ESG tactics is the negative impacts that factors of climate change have on the economy.  Environmental challenges go farther than reputation and regulatory risks for companies, they can cause resource scarcity which can devastate an entire economy.   Frequent natural disasters, increased global poverty,  political unrest, and instability are all components that can come out of environmental risks.  When companies and investors devote their resources to ESG initiatives, this can limit the “worst-case scenario” situations of the climate crisis.

Choosing a Software to Track & Report ESG

It’s important to find a software solution that helps track and reports ESG efforts.  Sustainable investing requires truthful ESG data, which can be seen all in one place.  DealCloud’s CRM deal management solution offers the ability to track and have automated reporting data.

If you’d like to learn more about DealCloud’s platform, schedule a demo here.

 

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Author:

Mithi Shukla

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