The role of Social Impact in modern investing is expanding. Understanding ESG scores is critical to your 2024 business strategy.
Businesses everywhere are turning their attention to projects, partnerships, and investments that prioritize social impact alongside return on investment and profitability objectives.
As corporate social responsibility (CSR) and commitments to solving global issues become increasingly central, businesses are under greater pressure to demonstrate their contributions to making the world a better place. The first step is understanding how your organization’s Environmental, Social, and Governance (ESG) performance scores are calculated, why they matter more now than ever before, and how you can improve them.
An ESG score measures how a business is perceived in terms of its performance on various environmental, social, and governance (ESG) topics. The key word here is "perceived," indicating that there can often be a gap between a company's actual performance and its public image.
Even if a business is actively working on sustainability, if this information isn't made publicly available, its ESG scores might not reflect its efforts. This gap can hinder investments and make winning business more challenging. It’s essential for your company to have both quantifiable data and the resources to accurately share your good work with the public.
Various third-party organizations, such as MSCI, Bloomberg ESG Data Service, Sustainalytics, RepRisk, and Institutional Shareholder Services (ISS), calculate ESG scores, each using slightly different methodologies. These scores consider factors like qualitative analyses of a company’s handling of ESG issues, comparisons of a company’s ESG performance against peers, and overviews of any potential ESG controversies. While there's a move towards standardizing ESG score calculations, variances still exist among different agencies.
Good ESG scores demonstrate to investors and potential customers that your company is well-equipped to navigate future risks and opportunities related to sustainability and social impact. Investors use these scores to make decisions about expanding their portfolios. Government agencies are beginning to grant businesses permission for critical resources, such as land, water, and electricity, based on their ESG scores. Businesses that make quantifiable strides towards social impact see increases in sales and investments. Consumers are demanding high standards of sustainability and quality of employment, influencing their spending habits. These factors are crucial when determining your ESG strategy.
Improving your ESG scores starts with identifying key ESG issues relevant to your company, employees, and investors. Engage with ESG rating agencies to identify gaps in your ESG strategy, then align your goals and create a concrete plan to address them. Directing part of your existing resources towards industry-specific ESG goals is more cost-effective and impactful than general ESG projects.
ScaleWith’s Social Impact AI provides businesses with tools to seamlessly integrate social impact initiatives into their sales and procurement processes. By embedding social impact at the transaction level, ScaleWith helps businesses achieve more substantial returns on investment (ROI) than traditional post-profit funding methods. Here’s how:
Being knowledgeable and focused on your company’s ESG score is crucial for future business growth, expanding brand loyalty, and optimizing for a sustainable future.
ScaleWith is an AI-powered SaaS solution that enables businesses to gain insights about shared social impact areas and deliver on those priorities through a simple, user-friendly platform. Learn how sellers can stand out from their competition and win more business, how procurement teams can derive new business value, and how ScaleWith allows companies to scale their impact efficiently with existing resources.
Book a free personalized demo to see how ScaleWith generates profits with purpose.
