ESG regulations offer abundant opportunities, like sustainable growth and value creation

More and more companies aim to foster sustainable growth while meeting stakeholder expectations. On top of that, European legislation is already in force, requiring companies to report on their ESG measures (Environmental, Social & Governance) starting in 2025. This entails a dedicated effort but also presents profitable opportunities.

Why should companies prioritize ESG? According to Javed Shams, Senior Sales Manager Data and AI at HSO, it's more than just a box-ticking exercise to comply with regulations and prevent damage to your reputation. There are several reasons why ESG is necessary. "Numerous studies have demonstrated a positive correlation between strong ESG performance and financial results. Companies excelling in this area can attract investors more easily, reduce costs, and capitalize on opportunities in emerging markets." In a time where transparency is increasingly commonplace, all stakeholders expect companies to commit to ESG principles. "Not only regulators and investors, but also customers and employees."

This starts with strategic alignment, explains Francesco Magalini, Industry Consultant Manufacturing and Enterprise Architect at HSO. "The key is to develop an understanding of the value of ESG. Look for areas where the company can create a positive social and environmental impact while improving financial performance. Then, engage with key stakeholders to understand their expectations, concerns, and priorities. Encourage open dialogue and collaboration to build trust and ensure initiatives align with the expectations of all those involved."

Continuous process

The next step involves conducting a comprehensive assessment of risks and opportunities throughout the value chain. After that, it’s time to measure performance, track progress, and effectively communicate results. "Ultimately, you must integrate ESG measures into all your business processes: strategic planning, investment decisions, product development and supply chain management. It’s a cyclical process, so you're never done," Francesco explains. "Continuous improvement is necessary to refine strategies and practices. You should regularly review and update ESG policies, procedures, and objectives. Stakeholder expectations will change, as will legislation and market dynamics."