Let’s Take a Deeper Dive into How Companies Are Striving to Make a Positive Impact.
You may already be familiar with the concept of a “carbon footprint,” a collection of data that shows how actions and choices made in an individual’s daily life equates to carbon emissions. But are you aware that many companies are focused on making a positive impact by reducing their carbon footprints?
Environmental, Social, and Governance (ESG) refers to a set of criteria that investors and companies use to assess the sustainability and ethical impact of their investments and business practices. ESG factors can be used to evaluate a wide range of companies, including those in the manufacturing, energy, finance, and consumer goods sectors.
ESG criteria are becoming important as investors and consumers demand greater transparency and accountability from companies.
Companies prioritizing ESG factors are more likely to attract investment and consumer interest. At the same time, those that don’t may face reputational and financial risks, especially as younger generations increasingly prioritize brands that align with their values.
A 2022 Stanford Law study determined that consumer demand for this information has skyrocketed through the evaluation of online searches over the past decade.
The impact of ESG factors can be far-reaching.
Environmentally, ESG criteria can help companies reduce their carbon footprint and promote sustainable resource use. Socially, ESG factors can help companies ensure that their operations respect human rights and labor laws, support diversity and inclusion, and contribute positively to the communities in which they operate. In governance, ESG criteria include compliance, the internal corporate culture, pay ratios, the company ethos, and transparency and accountability in leadership, CIO writer Sarah White explains.
How do B Corps Fit into the Mix?
While they are distinct concepts, there is an undeniable connection between ESGs and B Corps, as they both revolve around the idea of businesses operating with a greater purpose beyond profit.
B Corps, or Benefit Corporations, are a specific type of legal entity. B Corps are businesses that have chosen to meet rigorous standards of social and environmental performance, accountability, and transparency. They pursue a “triple bottom line framework” that prioritizes people, the planet, and profit.
Certified B Corporations participate in a thorough assessment to determine if their business practices meet high standards of verified performance, accountability, and transparency on factors such as fair treatment of workers, customer service, and community and environmental impact.
The connection between ESG and B Corps lies in the shared objective of promoting sustainable and responsible business practices.
While ESG is a broader framework used to evaluate the sustainability performance of any company, B Corps are specifically structured to embody those principles.
B Corps often score well on ESG assessments due to their holistic approach to business operations. They focus on creating positive social and environmental impacts while maintaining strong governance practices. B Corps are held to high standards of transparency and are required to report regularly on their social and environmental performance.
For more on B Corporations, read our blog Social Enterprises and B Corporations Make a Difference.
Visit One Planet Life’s Blog for a list of B Corporations we recommend you check out.
As investors and consumers demand greater transparency and accountability from companies, ESG criteria are sure to grow and evolve.
However, the concept of greenwashing can undermine the efforts of truly committed sustainable and ethical companies and mislead eco-conscious consumers. Read our article, “Getting to the Root of Greenwashing,” to learn more about what that term means and how you can spot it.
Written by Carley Kimball
Freelance Journalist and OPL Content Contributor
“I’ve always tried to implement planet-friendly practices in my life but didn’t quite realize just how much of an impact individuals can make until I was introduced to One Planet Life. I’m so excited to be able to utilize my professional skills to contribute valuable information and positive personal experiences to help make the world a better place.”