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This blog post will discuss ESG and corporate governance. What is Eco-social Governance? What are the benefits of ESG investing for companies, investors, and society? They’ll also investigate case studies of companies who are incorporating ESG principles into their business strategy.

The blog focuses on recent developments in the ESG and corporate governance space. The current situation will be compared to two scenarios: The first scenario is where companies have integrated ESG principles and CSR strategies into their business, leading to societal benefits within the company, and subsequently (or soon) to societal benefits outside of the company.

The second scenario describes where companies are incorporating ESG principles into their business without having any form of impact on society. This last scenario demonstrates a disconnect between the interests of a corporation and those of society.

The blog will also explore “best practices” for implementing policies that incorporate ESG principles into corporate governance. It will also illustrate the progress that has been made in the space ever since the introduction of the triple bottom line, as well as important challenges that must still be addressed.

What is Eco-social Governance?

ESG, also known as “sustainable development”, has been highlighted by the United Nations in an attempt to incorporate ethical values into corporate governance. ESG principles include policies and practices that contribute to alleviating poverty in developing countries or reducing carbon emissions.

The case study presented below will demonstrate the benefits of ESG investing for companies, investors, and society. Since corporations are driven by their bottom line goals (or “return on investment”), incorporating ESG principles into their business models can be used as a form of “cost-benefit analysis”. On the one hand, it provides positive financial incentives for companies to incorporate ESG principles into their corporate strategies. On the other hand, ESG policies, practices, and management strategies can be used as a competitive advantage in an international market.

Benefits of ESG Investing for Companies

Companies that invest in their corporate governance will benefit from higher profits, greater competitiveness in the marketplace, and more sustainable relationships with stakeholders. This is because actions taken by companies to improve social and environmental performance are generally agreed to bring about better business results. Several studies have been conducted on this phenomenon: For example, Corporate Social Responsibility research shows corporations that incorporate CSR into their business models can expect higher profitability. Other studies also show corporations that practice sustainability are stronger competitors on the market due to enhanced brand awareness.

The first and most important way of benefiting from corporate ESG practices is to improve profitability. To achieve these benefits, companies should integrate ESG principles into their business strategies. For example, a study of the Canadian forest sector showed that investors choose companies based on environmental performance and financial performance. Forest companies that manage environmental sustainability also have higher returns than those that do not.

This study also shows how investors regard environmental performance as a competitive advantage. A group of investors representing institutional investors had an average return on assets of 11.3% for forest sector firms that practice sustainability, compared with 9.7% for non-sustainable firms (a difference of 1%). The difference in returns is not only because of more profitable companies, but also because of more sustainable companies. The study found that the investors who were more successful with timber investments were those who used environmental performance as a criterion.

The second way to benefit from ESG investing is to gain competitive advantage in an international market. In a 2014 report titled “The Future of the Business Environment”, World Economic Forum listed climate change as one of the top five factors driving business competitiveness (alongside low levels of education, corruption in government, and aging populations). Furthermore, several studies have shown that companies that practice sustainability are stronger competitors on the market due to enhanced brand awareness and consumer confidence.

In a study of different industries, it was found that companies with the best sustainability practices had a higher market capitalization than their competitors. The study revealed that companies practicing sustainability had a greater market capitalization than the average by 165%. This means that, in terms of market value, companies practicing ESG principles are more successful than their rivals.

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Benefits of ESG Investing for Investors

Investors have a direct interest in companies practicing CSR and sustainability. Several academic studies have examined how to create better returns on investment from sustainable and responsible investment strategies (SRI). Some companies, such as Allianz SE, The Vanguard Group, and Calpers (a public pension fund for California state employees), have taken the lead in the SRI field by incorporating ESG principles into investment decisions.

At a macro level, investing in companies that practice CSR is beneficial for investors because it minimizes environmental damage and promotes societal well-being. For example, sustainable investing could reduce or eliminate global warming emissions. In 2010 Carbon Disclosure Project released a study showing how companies with higher transparency practices also produced less greenhouse gas emissions than companies with lower ones (carbon footprint).

At a micro level, corporate sustainability practices can be used as indicators of company performance and risk management. For example, Dow Chemical Company has developed a sustainability measurement system called the Dow Jones Sustainability Index (DJSI), which is based on a company’s management practices, environmental performance, and social responsibility.

The DJSI score can predict better financial performance than the Financial Times Stock Exchange Asia Pacific Index. The DJSI shows that sustainable companies are not only profitable, but also have lower risk profiles than non-sustainable companies. As an extra bonus, sustainable companies tend to outperform their peers by more than 10%.

Benefits of ESG Investing for Society at Large

ESG investing is also beneficial to society because it promotes corporate transparency and helps prevent future tax avoidance or illegal activities such as money laundering. In a 2014 report by the United Nations’ Broad Sustainable Building (BSB) Programme, it is stated that investment in sustainable development – and in particular green buildings – will create positive effects for citizens.

For example, sustainable architecture is a competitive advantage for cities; it improves health conditions and reduces costs caused by pollution. In the same report, it is stated that SRI and ESG strategies are cost-efficient tools to reduce greenhouse gas emissions and promote a clean environment.

Also, there are several studies showing that sustainable companies outperform their non-sustainable counterparts because they provide better social services to society. This is not only because they have better environmental performance, but also because they undertake ethical commitments. For example, the ESG report “Sustainable Finance: The Role of the Investment Community” published by Bloomberg New Energy Finance shows that socially responsible companies are more profitable than their non-sustainable counterparts.

Benefits of ESG Investing for Society at Large

​​Here is a summary of the advantages that investors have from investing in companies that practice CSR: ​Investors can benefit from investment strategies based on sustainable and responsible investment. With global warming posing a serious threat to society, investing in companies that practice sustainability can provide a competitive advantage over other businesses.

Investors can also take advantage of investment strategies based on sustainable and responsible investment. With global warming posing a serious threat to society, investing in companies that practice sustainability can provide a competitive advantage over other businesses.

Moreover, investing in companies that practice ESG principles is beneficial for investors as it helps minimize environmental damage and promotes better corporate transparency. Also, investing in sustainable companies outperforms non-sustainable companies because socially responsible firms are more profitable than their counterparts.

Hire the best ESG/ Corporate Governance specialists in 2,900+ industries

Fintalent is the invite-only community for top-tier M&A and Strategy talent. Hire global ESG/ Corporate Governance consultants with extensive experience in over 2,900 industries. Our platform allows you to build your team of independent ESG/ Corporate Governance specialists in 48 hours. Welcome to the future of M&A!

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Frequently asked questions

Most frequent questions and answers

What clients usually engage your ESG/ Corporate Governance Consultants?

We work with clients from all over the world. Our clients range from enterprise and corporate clients to companies that are backed by Private Equity or Venture Capital funds. Furthermore, we work directly with Family Offices, Private Equity firms, and Asset Managers. Most of our enterprise clients have dedicated Corporate Development, M&A, and Strategy divisions which are utilizing our pool of ESG/ Corporate Governance talent to add on-demand and flexible resources, expertise, or staff to their in-house team.

How is Fintalent different?

Fintalent is not a staffing agency. We are a community of best-in-class ESG/ Corporate Governance professionals, highly specialized within their domains. We have streamlined the process of engaging the best ESG/ Corporate Governance talent and are able to provide clients with ESG/ Corporate Governance professionals within 48 hours of first engaging them. We believe that our platform provides more value for Corporates, Ventures, Private Equity and Venture Capital firms, and Family Offices.

Our Hiring Process – What do ‘Community-Approach’ and ‘Invite-to-Apply’ mean?

‘Invite-to-Apply’ is the process by which we shortlist candidates for the majority of projects on our platform. Often, due to the confidential nature of our clients’ projects, we do not release projects to our whole platform but using the matching technology and expertise of our internal team we select candidates who are the best fit for our clients’ needs. This approach also ensures engagement with our community of professionals on the Fintalent platform, and is a benefit both to our clients and independent professionals, as our freelancers have direct access to the roles best suited to their skills and are more likely to take an interest in a project if they have been sought out directly. In addition, if a member of our community is unavailable for a project but knows someone whose skill set perfectly fits the brief, they are able to invite them to apply for the role, utilizing the personal networks of each talent on our platform.

Which skills and expertise do your Fintalents have?

The Fintalents are hand-picked and vetted ESG/ Corporate Governance professionals, speak over 55 languages, and have professional experience in all geographical markets. Our ESG/ Corporate Governance consultants’ experience ranges from 3+ years as analysts at top investment banks and Strategy consultancies, to later career C-level executives. The average working experience is 6.9 years and 80% of all Fintalents range from 3-12 years into their careers.

Our ESG/ Corporate Governance consultants have experience in leading firms as well as interfacing with clients and wider corporate structures and management. What makes our ESG/ Corporate Governance talent pool stand out is the fact that they have technical backgrounds in over 2,900 industries.

How does the screening and onboarding of your ESG/ Corporate Governance talent work?

Fintalent.io is an invite-only platform and we believe in the power of referrals and a closed-loop community. Members of our community are able to invite a small number of professionals onto the platform. In addition, our team actively scouts for the best talent who have experience in investment banking or have worked at a global top management consultancy. All of our community-referred talent and scouted talent are subject to a rigorous screening process. As such, over the last 18 months totaling more than 750 hours of onboarding calls, of which only 40% have received an invite-link after the call.

What happens if I am not satisfied with my ESG/ Corporate Governance consultant’s work?

During your initial engagement with a member of our Fintalent talent pool with no risk. If you are not satisfied with the quality of your hire for any reason then we are able to find a replacement at short notice. There is no minimum commitment per project, but generally projects last at least 5 days and can last 12+ months.

Interested in our invite-only community of tier-1 ESG/ Corporate Governance experts?

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