Green commerce and the rise of the conscious consumer
Green commerce models are growing as consumers look to reduce their environmental impact by purchasing used items or renting.
For companies seeking the business of values-led consumers as well as the support of investors, developing an ESG strategy has become a priority. But what is ESG, and why is it so important?
As public expectations around corporate responsibility grow, many people now weigh environmental and social commitments alongside price and quality. ESG policies give companies a way to define, act on, and communicate those commitments clearly.
What is ESG?
ESG stands for Environmental, Social, and Governance — three core pillars used to assess a company’s impact beyond profit. The ESG framework evaluates how responsibly and transparently a business operates across sustainability, ethics, and accountability.
There are three main pillars used to evaluate a company’s operations with respect to sustainability and ethical impact:
- Environmental (E): How does the company interact with the planet? This includes carbon emissions, energy consumption, pollution control, resource management, and climate change initiatives.
- Social (S): How does the company treat people? This covers workplace equity, labor conditions, community relations, customer rights, and diversity and inclusion efforts.
- Governance (G): How is the company run? Governance refers to leadership ethics, board diversity, executive compensation, anti-corruption measures, and shareholder accountability.
Investors increasingly use ESG criteria when choosing which companies to invest in, seeking to enact their values by supporting organizations that are committed to being good stewards of the environment, socially responsible in terms of diversity, equity, and inclusion, and practice ethical and accountable governance.
A global survey by PwC found that a majority of consumers are more likely to buy from brands that share their values across the three elements of ESG.
Moreover, 76% of the 5,005 consumers polled said they would stop buying from a brand that treats employees, the environment, and the communities poorly.
Why is ESG important?
ESG has evolved into a business imperative, not just a reputational advantage. Consumers, employees, and investors increasingly expect companies to lead on environmental and social issues — and penalize those that don’t.
In a recent PwC survey, 91% of business leaders acknowledged their responsibility to act on ESG issues.
This reflects a broader shift toward aligning corporate values with social and environmental priorities.
Embedding ESG into governance structures and daily operations helps companies move from intent to measurable impact. Consistent ESG reporting not only builds transparency but also attracts value-aligned investors.
It’s important to note: ESG and sustainability are related but not synonymous. ESG is a framework for making business decisions and measuring performance, while sustainability is often a desired outcome.
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Examples of ESG policies and practices
ESG policies are typically categorized under three pillars — Environmental, Social, and Governance. Each pillar includes specific actions and metrics designed to align corporate behavior with ethical, sustainable, and transparent operations.
Environmental impact:
- Climate change and carbon emissions: Implement measures to reduce the company’s carbon footprint through energy sourcing, transportation, and offset programs.
- Air and water pollution: Monitor and manage emissions and waste discharge to protect air and water quality in surrounding ecosystems.
- Biodiversity: Develop land use and supply chain policies that minimize disruption to natural habitats and preserve ecological diversity.
- Renewable energy: Transition to clean energy sources like solar or wind to reduce dependence on fossil fuels.
- Deforestation: Avoid supply chains linked to deforestation; adopt sustainable forestry and paper sourcing standards.
- Energy efficiency: Optimize systems to reduce energy waste and improve operational efficiency across facilities.
- Waste management: Implement policies for recycling, hazardous waste disposal, and reduction of single-use materials.
- Water scarcity: Reduce water usage, especially in production processes, and adopt sustainable water sourcing strategies.
Social impact:
- Customer satisfaction: Maintain high product quality and service responsiveness, and use feedback loops to improve customer experience.
- Data protection and privacy: Safeguard consumer and employee data with strong cybersecurity practices and transparent privacy policies.– take care of customer data; it’s the right thing to do and it’s the law
- Gender and diversity: Foster diversity, equity, and inclusion (DEI) across hiring, leadership, and supplier relationships.
- Employee engagement:Cultivate a workplace culture that prioritizes respect, feedback, and professional development.
- Community relations: Build trust with local communities through partnerships, volunteering, and impact programs.
- Human rights: Align business operations with internationally recognized human rights standards.
- Labor standards: Uphold fair wages, safe working conditions, and ethical labor practices across the supply chain.
Governance framework and structure:
- Tax strategy: Operate with integrity by complying with tax laws and maintaining transparent financial reporting.
- Executive remuneration: Design compensation plans that align leadership incentives with long-term stakeholder value.
- Donations and political lobbying: Disclose political contributions and ensure lobbying aligns with company values and ethics.
- Corruption and bribery: Enforce zero-tolerance policies with mechanisms for detection and enforcement.
- Board diversity and structure: Maintain a diverse and independent board with appropriate oversight and accountability mechanisms.
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ESG vs. Sustainability: What’s the difference?
While often used interchangeably, ESG and sustainability are distinct — and understanding the difference matters for investors, business leaders, and policy-makers alike.
Sustainability is a broad concept that refers to meeting present needs without compromising the ability of future generations to meet theirs. It includes environmental stewardship, social equity, and long-term economic health.
ESG, by contrast, is a framework used to measure and manage specific environmental, social, and governance factors that influence a company’s performance and impact. ESG provides tangible criteria for risk assessment, compliance, and ethical accountability.
Think of it this way: sustainability is the goal, and ESG is a set of tools and metrics to help achieve it.
For example, a sustainable business might aim to reduce emissions and support community growth. An ESG-aligned business would report its carbon footprint, audit its diversity metrics, and ensure its board follows ethical governance practices — all measurable indicators of progress toward sustainability.
What are the benefits of ESG?
Adopting ESG practices offers businesses a competitive edge while mitigating risks that could damage reputation or financial stability. Companies that align with ESG standards are less likely to face scandals, regulatory penalties, or public backlash — all of which can lead to lost market value.
Long-term value creation is another key benefit. ESG-aligned firms often demonstrate stronger resilience, operational efficiency, and investor appeal. They tend to attract capital from funds and institutions focused on ethical or impact-driven investing.
For stakeholders, ESG reports offer transparency into how a company addresses critical issues like climate risk, human rights, and supply chain ethics. This helps investors align their portfolios with their values — and apply pressure where performance falls short.
For example, a company committed to ESG may choose suppliers that adhere to fair trade standards, reduce emissions through sustainable logistics, and support labor rights across its production network.
Ultimately, ESG isn’t just about compliance — it’s a pathway to building trust, attracting investment, and driving measurable impact.
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How does ESG create value?
Companies that embed ESG into core operations often see tangible business benefits — from risk reduction to improved financial performance and long-term growth.
- Risk mitigation: ESG strategies help companies avoid scandals, lawsuits, and compliance issues tied to environmental harm, labor violations, or unethical governance. This shields shareholder value and brand reputation.
- Operational efficiency: ESG-aligned businesses frequently reduce costs by streamlining resource use, cutting energy waste, and optimizing supply chains — all of which improve margins.
- Talent performance and retention: Inclusive and values-driven workplaces are linked to higher morale, lower turnover, and increased innovation. Employees who feel safe and represented tend to outperform.
- Investor appeal: Many institutional investors favor companies with strong ESG credentials. Transparent ESG reporting improves access to capital from funds focused on sustainability and impact.
- Growth potential: According to a McKinsey report, ESG strategies often catalyze revenue growth by opening new markets, enhancing customer loyalty, and improving competitiveness.
In short, ESG isn’t just a moral framework — it’s a value driver across multiple dimensions of business performance.
According to McKinsey’s study, ESG strategies tend to propel businesses toward greater top-line growth by opening new markets and expanding market share in existing ones.
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ESG Reporting & transparency
Transparent ESG reporting is no longer a “nice-to-have” — it’s becoming a baseline expectation for companies seeking capital, trust, and long-term growth.
ESG reports outline a company’s measurable progress across environmental, social, and governance criteria. These disclosures help investors, employees, and regulators assess how well a company is living up to its stated values and risk commitments.
Common reporting frameworks include:
- GRI (Global Reporting Initiative): Widely used for sustainability disclosures
- SASB (Sustainability Accounting Standards Board): Focused on financially material ESG issues
- TCFD (Task Force on Climate-related Financial Disclosures): Targets climate risk and financial transparency
Effective ESG reports include metrics like carbon footprint, board diversity, supplier ethics, and labor conditions — often audited or verified by third parties.
Companies that report consistently tend to enjoy greater investor confidence and stakeholder loyalty. In many jurisdictions, ESG disclosures are also becoming regulatory requirements, reinforcing the importance of proactive transparency.
Bottom line
It may seem simple, but it often boils down to this: Being a better corporate citizen and respecting and protecting people and environments opens more doors and generates more good will.
That means more business opportunities than a company with a weak or nonexistent ESG strategy.
Today, business success depends on more than technological advancement and operational efficiency. It also depends on evolving socially and ethically to gain the trust that drives long-term growth.