How ESG Relates to the Habits of the Modern Consumer
STORY INLINE POST
Three letters are revolutionizing the corporate ecosystem. ESG (environmental, social, governance) has become a priority for companies around the world due to the benefits of adopting these guidelines.
Combating climate change, optimizing time, resources, organizational culture, and renewed ethics are some of the most important ESG benefits. Additionally, consumers and clients prefer brands and companies with corporate responsibility.
Forecasts from the United Nations (UN) estimates that by 2050, the world population will be 9.6 billion people. What does this scenario mean? Consumption will increase, and with more people acquiring products and services, waste generation will follow; after this, there will be an acceleration in climate change.
This is where the need to promote a culture of responsible consumption arises. For this, our great ally, in modern times, is a mindset focused on ESG guidelines because this practice implies a better, reasoned decision-making about the products and services that, as a company, will be offered.
Moreover, ESG criteria also have a strong impact on investment. In 2020, the global firm BlackRock conducted a survey of more than 425 investors around the world, managing capital of US$25 billion.
This study revealed that between 2020 and 2025, this group would seek to double its sustainable investments, which would mean having almost 35% of its assets under management allocated to ESG strategies. Invariably, we can see that responsible investment is the centerpiece for an industry looking to grow in the present and immediate future.
Responsible consumption and ESG guidelines pursue a central objective: to integrate social, environmental, and ethical aspects into consumers’ purchasing decisions and, with respect to companies, their offerings. This is how companies can minimize their carbon footprint, have a positive effect on society, and create ethical work policies.
Rather than mentioning the generalities of ESG, it is more effective to focus on specific actions to align ourselves with the way we consume. For this reason, I will highlight three operational pillars: energy efficiency, reduction, and sustainability.
The Keys to Sustainable Consumption
Today, the linear economy is losing ground to circular models. The search for reusable or recyclable products and solutions sets the trend for environmentally friendly components.
The traditional economy of exploiting, producing, using, and discarding causes serious environmental consequences, favoring the generation of waste known as greenhouse gases (GHG), which accelerate global warming and climate change.
Moving toward a circular scheme allows the reduction of the effects mentioned above. The circular model constitutes a revolution in the methods of production and consumption. It is based on consumption and disposal in order to move toward processes that regenerate natural systems, instead of degrading them. Additionally, waste is eliminated from the design stage, and products are used for a longer time.
Implementing the circular economy has a direct impact on the fight against climate change and waste prevention. How can we see this? If we change the way we use and produce components, such as cement, plastic, steel, and aluminum, GHG emissions could be reduced by 40% by 2050, and 25% of material costs per ton of steel could be saved if it were recycled.
So far, the actions that promote this type of economy are guided by sustainable production as well as local and seasonal consumption that minimizes emissions derived from the transportation of products and encourages the regeneration of land for cultivation.
If we want another way to strengthen sustainable procurement, we could go for biodegradable packaging or packaging made from recycled materials. Products manufactured according to the principles of responsible consumption are more efficient and contribute to economic savings.
Promoting renewable energy sources contributes to the revolution of this sector and to a proper use of natural resources. In addition to this, it is important to use energy responsibly, reducing unnecessary expenses, and to promote companies that apply efficiency and sustainability criteria in their processes.
Another industry that also contributes to sustainable consumption with ESG guidelines is transportation.
Reducing the use of private cars and taking advantage of public services or bicycles not only has environmental benefits, but also contributes to improving mobility in cities and promoting an optimal quality of life. Initiatives like transportation technology applications decongest traffic, save costs, and democratize it for more people.
The social and governance axes are covered through inclusion and diversity policies. Today, it is undeniable that having more diverse sectors increases productivity as well as participation, while promoting a wider spectrum of beliefs, opinions, and ways of thinking, which, invariably, will add special value and cultural richness to a work team.
This can create a greater understanding of what modern consumers are looking for today, how to approach them, and be more attractive as a company and from the products and services they offer.
In general terms, applying ESG criteria in the business ecosystem has shown results that are changing the corporate world as we know it, and the numbers are there.
According to Dun & Bradstreet, 75% of respondents said that these guidelines contribute to the reduction of corporate costs, while 72% said they have improved the performance of their investment portfolio, and nearly 80% have identified growth opportunities.
Measuring and implementing ESG criteria in a company is a reality that we are already living with throughout the corporate environment.
If we want to contribute to responsible consumption that slows down global warming, it is necessary to evolve along with purchasing habits and direct them toward initiatives and actions in favor of the environment, social improvement, and corporate governance. ESG is the present and the future of the entire industry. It is our duty to be more responsible and transform our ecosystem for the benefit of all.