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What Is ESG Strategy And Its Importance?

Financial measurements have been the only gauge used to measure a business’s success for a long time. But now, Environmental, social, and more CFOs and CEOs are adopting governance (ESG) objectives and corporate ESG strategies to fulfill consumer and investor expectations as the need for sustainable and inclusive growth strengthens.  Do you have an ESG plan in place for your company? If you’re unsure, don’t be worried. With the aid of this article, we will teach you the fundamentals of ESG. We also remove the fallacy that ESGs are exclusively used by big businesses and help in ESG Strategy development and enable you to build your ESG investment strategy with the help of ESG strategy examples.

What is ESG?

ESG is the acronym for Environmental, Social, and Governance. ESG, first used in 2005, refers to a broad spectrum of problems that might directly or indirectly affect financial significance. Resource management, (green) management of supply chains, organizational health, safety regulations, and trust-building via transparency are a few topics ESG reporting covers.

Environmental, Social, and Governance, or ESG, are the key factors determining whether an investment is sustainable. In other words, it serves as the measure by which investors, particularly venture capitalists (VCs), evaluate the social or environmental responsibilities of the firms.

E’ in ESG stands for the environmental effects of a company’s resource use, including its carbon emissions and wastewater discharge.

Social regulatory measures, such as the gender pay gap, equality, or diversity, are considered “S” in ESG.

Governance, processes, and policies that guarantee compliance with regulatory and legal compliance are examined by the “G” in ESG.

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Why is ESG strategy  important for startups:

The unanticipated threats of a pandemic and catastrophic climate change, which had a substantial impact on the global economy, are inextricably intertwined. Governments and a large number of investors have come to recognize the need to accelerate investments in established businesses that have a strong emphasis on ESG strategies. Our society no longer relies solely on the government to meet its needs; instead, it also depends on corporations and businesses to meet those needs through their corporate ESG strategies. These needs range from the creation of jobs to the preservation of natural resources to the defense of consumer interests.

Here are some justifications for why ESG is crucial for your company:

1. ESG Strategy makes your company’s operations profitable and sustainable: 

Effective corporate ESG strategies may lower businesses’ energy, water, and waste costs and encourage strategic resource use. ESG strategy eventually supports cost reduction and top-line growth. ESG strategy development may successfully save operational costs and boost profit by up to 60%, according to a Mckinsey analysis.

A corporation may more easily penetrate new markets and expand its operations there if it has a robust ESG strategy. Governments facilitate the access by issuing licenses and permissions to these organizations.

2. Corporate ESG strategy Gain customer praise: 

Customers are placing more and more pressure on firms to be ethical and ecologically conscious. According to Forbes, Generation Z would choose to purchase from sustainable companies and firms that are  ESI strategy examples by 62% and  50% of millennials said the same. So ESG strategies development would lead to being in customers’ good books.

3. ESI investment strategy Gain credibility with investors: 

Corporate ESG strategy is becoming more common in investors’ investing decisions. Investors use a variety of indicators to assess a company’s success, including Key metrics for people, the planet, prosperity, and governance principles.

4. ESG strategy development Enhance employee loyalty: 

As employees care about company responsibility, ESG strategy development may boost productivity and attract top talent. Better health and safety regulations might also aid staff retention. Organizations that set a standard for ESG strategy (ESG strategy examples)are recognized for attracting top talent and having superior retention rates. When there is a clear sustainability plan, staff members feel inwardly proud.The younger generation favors working for organizations that have larger societal obligations.

64 percent of Millennials consider a company’s social and environmental objectives when choosing where to work – according to a Cone Communications survey on Millennial Employee Engagement in 2016.

5. ESG strategy development decreases expenses.

Businesses that use more eco-friendly production techniques, businesses become more productive and reduce their costs. One corporation with plans to invest up to USD 2.1 billion in the development of more ecologically friendly packaging options by 2025 is Nestlé. ESG investment strategy approach saved it from non-compliance fines in the various operational regions where there are stronger regulations on the usage of plastic containers in addition to assisting it in reducing its carbon footprint. ESG investment strategy leads to the Management of stakeholders’ and regulatory compliances efficiently.

All businesses are affected by one or more sorts of regulations based on the marketplaces they serve. Companies implementing ESG strategies, especially in governance, are susceptible to less regulation and have greater operational freedom. Consumers favor these brands.

More than 10,000 parents of Starbucks employees in China received health benefits as a result of Starbucks’ introduction of the “Starbucks China Parent Care Program” in 2017. It is an ESG strategy example in action.

Related Article: What Function Does A Lead Investor Perform?

The current state of ESG in startups

ESG policies, in the opinion of many investors, are currently more effective than ever. The growth of COVID-19 and the Black Lives Matter movement highlighted how crucial it is for both established businesses and start-ups to implement ESG practices.

In a poll to determine how current events in the world, particularly the Black Lives Matter movement, affected start-ups’ adoption of ESG, over 66 percent of respondents emphasized the need to establish ESG policies that place a greater focus on inclusivity.

Regarding the advantages provided by ESG policies, 69 percent of respondents said that ESG would increase sales, and 91 percent said that it would help their firms recruit and retain the finest personnel.

Start-up founders were asked if investors care about ESG policies, and 20% of them said that they didn’t, while 37% said they did, but it would take more time for ESG regulations to be accepted.

How to embrace ESG in your startups?

  1. Monitor your carbon emissions and minimize them.

Make a difference in the environment and support the preservation of biodiversity.

  1. Set objectives and track your advancement.

Get all the information you want for the industry you work in, and then build a dashboard with the appropriate Key Performance Indicators to track your success.

  1. Be clear about your position.

Gather and share your ESG data with the industry, customers, workers, and investors. Additionally, you may discuss your ESG accomplishments and how you want to keep becoming better on your recruitment page and social media platforms.


To profit in the short and long terms, businesses of all sizes must prioritise corporate ESG strategy and ESG investment strategy.and become an example of ESG strategy.ESG is frequently thought to be a task best left to large corporations and not something small businesses can do, but this is incorrect.

Why not implement the ESG investment strategy in the present business environment if you want your firm to succeed? As more individuals become aware of the significance and advantages of ESG practices and ESG strategies, failing to do so might negatively affect your company.

The benefits of ESG investment strategies include accelerating growth, lowering costs, increasing effectiveness, luring talent, and luring future Millennial and Gen-Z clients; this highlights why developing ESG strategies is more important than ever. A prudent choice for businesses, the planet, society, and humanity as a whole is a corporate ESG strategy.But developing a ESG startups requires more investment and right investors.  bridges the gap between investors and founding companies to help individuals with rewarding fundraisings. We have a database and insights of  more than 10K investors who are ready to fund your startup. So, use our platform today!

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