Environmental, Social, and Governance (ESG) has been a hot topic in the business world as climate change impacts global markets. While it’s great that this important theme has been garnering attention, there are some common misconceptions floating around. Let’s set the record straight.
Myth 1: ESG data isn’t reliable.
Facts: ESG data has become reliable with the rise of reporting frameworks and carbon accounting technology. Organizations can accurately track and report emissions down to the product level thanks to robust ESG platforms like Salesforce Net Zero Cloud. While Scope 3 emissions are still challenging to track, most organizations can create enough of a full picture of their emissions to understand their risks and impacts and act accordingly.
Myth 2: ESG comes at the expense of investment performance.
Facts: ESG-focused companies have seen not only higher returns but stronger earnings growth and dividends. Investors are increasingly considering ESG when deciding where to invest. Companies that are transparent about their ESG performance can build trust with investors, boost their brand reputation, and better guard against climate-related risks.
Myth 3: ESG is polarizing.
Facts: While there is some political debate about ESG, the data shows that ESG is not actually all that controversial. In fact, 77% of consumers are concerned about the environmental impacts of the products they buy and 76% would switch their preferred packaged goods if they were offsetting carbon emissions. Investors are also increasingly favoring ESG investing. 89% of investors consider ESG issues in some way as part of their investment approach, according to a 2022 study by asset management firm Capital Group.
Myth 4: ESG is a trend.
Facts: ESG is here to stay. As regulators, consumers, and investors all place increasing importance on ESG, we can expect that it will quickly become a standard part of conducting business. Companies that ignore ESG will face increasing consumer pressure, dwindling market share, and potential penalties from regulators.
Myth 5: ESG is only relevant for certain industries.
Facts: All organizations have environmental, social, and governance impacts to consider. While certain sectors have a more pronounced influence on the environment, all organizations create emissions. Every organization can benefit from understanding their climate-related risks and opportunities, as well as the social impacts they create on their communities and employees. Reducing risks, improving reputation, and decreasing costs are benefits that any company can reap with a solid ESG strategy.
ESG is an increasingly vital consideration for businesses, consumers, and governments alike. As more people join the conversation, it is vital to look to experts for truthful, up to date information about ESG.
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