The UN has reported that action to mitigate the risks of climate change must be taken “now or never”. The ticking time bomb of climate risk has become louder and louder in the past decade, with large swathes of the Amazon rainforest burning in 2019, major flooding throughout Asia in 2021 and an alarming heatwave in Antarctica reported just this month.
Commissioned and endorsed by 195 governments, the UN report urges an end to all fossil fuel subsidies and warns that oil and gas will become stranded assets in the next few decades. The impact on the global economy will be huge and is already impacting business strategy and day-to-day operations of organizations globally.
The governments of the world have sought to reduce global warming, pledging climate action during COP26 in 2021. This change in governance, tied with changing public opinion on conservationism and climate change, has led to businesses’ ethical expenditures being more closely examined.
As a result, ESG goals are no longer a minor consideration for businesses, but are an essential and expected part of business strategy and operational management. To operate and compete in today’s economy all organizations must set ESG goals and act quickly to achieve them.
What does ESG mean?
Environmental, Social and Governance (ESG) goals are objectives set within a business in order to direct and actively manage the organization’s impact on society and environmental sustainability.
These goals allow socially conscious investors to screen for potential investments efficiently, while developing an understanding of the organization. For these and other stakeholders, including customers, partners and employees, the ESG goals create important engagement points that help prioritize investments of time and financial resources.
ESG goals are reported in relation to the World Economic Forum metrics. These in turn align with the United Nations Sustainable Development Goals (SDGs) which are a universal call to protect the planet, end poverty, and ensure peace and prosperity by 2030.
Environmental criteria establish how a company will perform as a steward of nature and set out its commitment to future generations. This may include a company’s energy use, waste, pollution, and treatment of animals. These criteria can highlight environmental risks a company may face and its approach to management of them. A few examples of environmental goals that a company may have are:
- Use non-toxic or less toxic substances
- Reduce waste and use of paper
- Install automatic light shut off in the office
The social criteria described in ESG Goals refer to the company’s contribution to the community and its relationships with external contributors. These may consider working conditions, data protection, and employee relations and diversity. A few examples of a company’s social goals may be:
- Labour standards across supply chains that guarantee fair wages and human rights protection
- Good relations with local communities who give social license for companies to operate
- Diversity and inclusion policies to ensure no type of discrimination
A company’s governance criteria relate to its approach to operating procedures, disciplines and licence. These establish direction and add transparency to how the company conducts its operations. The criteria may govern political lobbying and donations, tax strategy, executive pay, and approaches to privacy and information security. Investors, customers, partners and others may want to know, for example, that a company uses accurate and transparent accounting methods and adheres to GDPR and other data protection regulations. A few examples of a company’s governance goals are:
- Whistle-blower schemes
- Stockholders’ ability to vote on important issues
- Regulatory compliance
Why Should Businesses Be Concerned with ESG Goals?
ESG goals articulate company vision, direct strategy and hold the company accountable. They provide a vision for the company’s future and, when managed successfully, generate business value. They ensure that businesses continue to develop and adapt in a rapidly changing global economy.
ESG goal setting is an accepted standard for Fortune 50 Companies. A report by Sustainable Brands concluded that of the 50 companies questioned the average company has 17 ESG goals. These included reducing greenhouse gas emissions, increasing workplace diversity, investing in sustainable energy and transparent financial practices. ESG goals are no longer deemed niche, but are an aspect of company operation that is necessary to be competitive in the 21st century.
Companies which set ESG goals are more attractive to investors, stakeholders and customers. These companies are less precarious within the current climate of shifting governmental trajectories and changing public opinion.
Investors perceive that ESG goals mitigate risk and provide more sustainability and reliability for stakeholders. They fulfil a practical purpose rather than articulating purely ethical concerns. Companies that follow ESG criteria are more able to avoid significant risks. Examples of the costly impact of failure to avoid these risks include BP’s 2010 oil spill and Volkswagen’s emissions scandal, both of which rocked the companies’ stock prices and resulted in billions of dollars in losses.
Companies which have ESG goals are less likely to be disadvantaged by new government regulations designed to build more sustainable and resilient societies. As global energy demands increase over the next 20 years, companies which transition to low carbon operations will gain advantage.
Moreover, customers have become increasingly concerned with companies’ carbon footprints. In a 2021 report, Deloitte reported that 28% of consumers have stopped buying certain products due to environmental concerns.
During the COVID-19 pandemic, companies were placed under greater scrutiny in relation to their ethical performance. Resilience and sustainable practices became highly valued, even while efficiency remained important. Customers now recognize their ability to impact corporate activities and can hold companies responsible for managing ESG risks. Companies that do not prioritize fighting global warming risk losing customers and seeing their revenue and profits fall.
How Can You Reach Your ESG Goals?
Simply put, reducing your reliance on paper is a high-impact step that every organization can quickly take. Over 400 million tons of paper and cardboard are produced annually. This has a devastating impact on the environment and leads to increased deforestation rates and continuous air pollution.
It is not just the production of paper that has negative environmental effects. It continues to impact our life cycle when paper is disposed of. Paper accounts for a quarter of total waste at landfills.
On account of its wide availability and affordability, paper has persisted as an accepted part of operations in most businesses. But the wasteful continued use of paper, without justification, has put paper-based business practice under the ESG spotlight. The importance of achieving ESG goals is driving businesses to cut back on their use of paper.
This may seem a seismic shift for businesses which have relied on paper documents being manually delivered, forwarded and processed within their office space. But the technology is now available to quickly, easily and comprehensively scale back the role of paper in business operations. A digital transformation of paper-based business is already underway and ESG agendas in thousands of organizations are accelerating the switch to digital.
How Lithe Helps Deliver ESG Goals
Lithe helps its customers jettison their paper-laden practices. We deliver a digital transformation of our customers’ operations that halts the flow of paper while simplifying the flow of information.
Lithe Digital Documents, our flagship product, ensures all information contained within physical documents is digitally transformed and promptly forwarded to the correct team or individual. Our intelligent document workflow and processing transforms document intensive business processes to friction-free, paper-free operations. We enable our customers and all their stakeholders to engage digitally, removing the reliance on paper and helping meet multiple ESG goals, including:
- Cut paper and reduce waste
- Increase information security
- Meet regulatory compliance obligations
Digitizing document workflow with Lithe Digital Documents enables businesses to reach not only their ESG goals, but also to:
- Increase team productivity
- Improve responsiveness to customers
- Ensure document security
- Cut costs
- Reduce processing times
- Accelerate digital transformation
If you would like to digitally transform your document workflow and reach your ESG goals, contact us today.