ESG for startups l “ESG” stands for “environmental, social, and governance” and is used to report criteria used in a company’s operations.
（ESG）已成為評估企業 l「環境、社會及管治」 營運表現的指標。
l Closely related to sustainability reporting, it is a factor to be considered by startups in relation to their business models.
l 為配合可持續發展，不少初創企業將 ESG 理 念融入其商業模式中。
l Dr Thomas Tang of City University of Hong Kong, a widely experienced sustainability consultant and teacher explains its application.
l 來自香港城市大學可持續發展顧問鄧錫權博 士為我們解釋企業如何應用 ESG 原則。
How does ESG affect young entrepreneurs? As the threat of climate change and the depletion of natural resources grow, so investors tend to factor sustainability in their investment choices so it is important for young entrepreneurs to know how ESG might affect them. How would you define ESG? Basically put, environmental, social, and governance standards (ESG) indicate how well a company or organization performs in terms of social responsibility, environmental protection and ethical and governance.
Are you truly describing your company or is it just greenwashing? Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. Underpinning these factors is corporate governance which looks into the roles and responsibilities of the management of a company through its board, shareholders and the various stakeholders in that company.
In which way is ESG part of a sustainable business model? Companies today are expected to run successful businesses that make profits but stakeholders expect them to do so in an ethical and responsible way. For example, companies that mistreat their staff and contractors or carry out manufacturing practices that damage the environment not only run the risk of being penalized by the authorities but also of losing out to their competitors in terms of reputation and branding, which in turn affects market share. Applying ESG to business practices and business models helps promote responsible business behaviour across the company so that staff, customers, suppliers and other stakeholders can see that the company is taking a clear position on how it conducts business and how leadership decisions are taken. To incorporate ESG into a business model, you must declare your commitment through your mission and policies, set up clear guidelines and procedures for staff and others doing business with you and then “walk the talk” by making sure that your actions and decisions follow the principles of respecting society and the environment. This is not always easy as there are many grey areas where your business may be in doubt as whether to pursue a certain business interest or work with certain partners who do not apply ESG principles, and that will be the test of how committed your company really is.
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