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ESG-focused Decision-Making for Low-Carbon Economy

by | Aug 28, 2023 | Sustainability |

ESG-focused Decision-Making for Low-Carbon Economy
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ESG-focused Decision-Making for Low-Carbon Economy
Learn why we need to take concrete action and implement accountability at every level with environmental, social and governance (ESG) goals to transit towards a low carbon economy.
Energy is a fundamental aspect of our modern world, and it’s undeniable that humans are heavily dependent on it. Not surprisingly, the demand for energy continues to rise as we strive to keep up with our fast-paced, energy-hungry lifestyles. Access to reliable, affordable energy is critical for achieving economic security and growth, and this is especially true for a country like India with a large population and rapid infrastructure and economic development.
However, the dependency on energy resources has also led to complex issues and challenges that cannot be ignored. The global economy is heavily reliant on oil and other non-renewable energy resources, which has led to unsustainable exploitation and depletion. As we acknowledge the need to address emissions and move towards sustainable energy practices, it’s crucial that we also hold ourselves accountable at every level.
Mere talk about sustainability is not enough; we need concrete actions and enforcement to ensure real change. After all, we have already pushed nature to its limit, and it’s high time we reciprocate by making every effort to protect and preserve our ecosystem.

What is Environmental, Social and Governance (ESG)?

ESG is a set of criteria that investors, businesses, and other stakeholders use to evaluate a company’s performance and impact in three key areas:

1. environmental responsibility,
2. social sustainability, and
3. corporate governance practices.
These criteria are considered important indicators of a company’s commitment to sustainability and responsible business practices.

“Mere talk about sustainability is not enough; we need concrete actions and enforcement to ensure real change”

Why is Environmental, Social and Governance (ESG) Important?

ESG provides a framework to integrate businesses within their core operation. Incorporating such practices (i.e. ESG) in organizations will allow businesses to make informed decisions, minimize environmental impact, support communities, and ensure long-term sustainable growth in the transition to a low-carbon economy which we are striving for.

Also Read: Sustainability and Societal Well-Being: A Shared Responsibility for India’s Prosperity

Who sets the ESG standard?

There is no single central authority that determines the ESG standards. Instead, ESG criteria and reporting frameworks are developed and promoted by various organizations, regulatory bodies, and industry associations.
Some of the most well-known entities involved in shaping ESG standards include: Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), United Nations Global Compact (UNGC), etc.
However, it’s important to note that the ESG landscape is continually evolving, and new frameworks and standards may emerge over time.
While there are no globally uniform ESG standards, the growing importance of sustainability and responsible business practices is driving organizations to align with commonly recognized frameworks to meet the expectations of stakeholders and investors.

Three Critical Dimensions of ESG

1. Environmental Factors: This aspect of ESG evaluates a company’s impact on the natural environment. It includes assessing the company’s carbon footprint, energy efficiency, water usage, waste management practices, pollution levels, and efforts to mitigate climate change.

2. Social Factors: The social aspect of ESG focuses on a company’s relationships with its employees, customers, suppliers, and the communities in which it operates.

3. Governance Factors: Governance refers to the internal structure and decision-making processes of a company. This aspect of ESG involves assessing the quality of the company’s management, board independence, executive compensation, shareholder rights, transparency in financial reporting, and adherence to ethical business practices.

Related Read: Emissions: Understanding Scope 1, 2 & 3

Benefits of ESG-focused Decision-Making

1. Risk Mitigation: By addressing environmental and social risks, businesses can reduce their exposure to potential liabilities and regulatory fines.

2. Innovation and Resilience: Embracing sustainability often drives companies to innovate and adopt new technologies and practices that reduce their environmental impact. This focus on innovation enhances the company’s resilience to changing market conditions and consumer preferences.

3. Enhanced Brand Reputation: Companies with a strong commitment to ESG principles are more likely to be viewed positively by consumers, investors, and other stakeholders. A positive brand reputation can lead to increased customer loyalty and attract long-term investors.

4. Access to Capital: Investors are increasingly considering ESG factors when making investment decisions. Businesses with robust ESG practices are more likely to access capital from a broader range of sources and potentially at lower costs.

5. Employee Engagement and Retention: Younger generations of employees are particularly drawn to companies with a sense of purpose and strong sustainability practices. Attracting and retaining top talent can be easier for companies that prioritize ESG.

How Biofuels Help in ESG?

Biofuels play a vital role in advancing ESG (Environmental, Social, and Governance) principles by offering a sustainable and low-carbon alternative to traditional fossil fuels. By reducing greenhouse gas emissions and air pollutants, biofuels contribute to environmental goals.
They also promote rural development, create jobs, and enhance energy security, addressing social aspects. In terms of governance, policies supporting biofuel use and responsible sourcing ensure a diversified energy portfolio and transparent supply chains.
Embracing biofuels fosters a greener and socially responsible future, aligning with global efforts to combat climate change and promote sustainable practices.
As we move towards a more sustainable future, biofuels are emerging as a key component of alternative energy solutions. Don’t miss the opportunity to be a part of this transformative journey. Choose your decision wisely.

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