Most private businesses have limited resources, which makes it difficult for them to embed sustainable business practices as comprehensively as their larger counterparts, who in many cases will have much deeper pockets. However, sustainability for private businesses does not need to mean exactly what it means for larger corporations. Private businesses have the advantage of approaching ESG in a more tailored and nuanced way that aligns with their capabilities, while responding to any reporting requirements they may face.
Mandatory reporting requirements of larger corporations will eventually permeate through the entire business ecosystem. Private businesses should therefore embrace sustainability, albeit in a way that is most relevant and impactful to them. There exists a wide array of advantages that businesses can realise in integrating important Environmental, Social and Governance principles. These include reducing costs, improving operational efficiency, enhancing reputation, increased accountability, and attracting talent.
The ESG advantage
Modern-day consumers, employees, and investors care about sustainability. Therefore, integrating fit-for-purpose ESG practices can be highly advantageous and should be a future bedrock strategy for businesses. This could also be the key to standing out and achieving faster growth.
Some examples of this include:
- Cost savings: Sustainable practices can lead to significant operational cost reductions. Initiatives like energy efficiency, waste reduction, water conservation, green procurement, sustainable fleet management can help businesses save money on utility bills, maintenance fees, disposal costs, and taxes. For example, waste reduction through recycling and better resource management can minimise expenses associated with material procurement and waste disposal.
- Improving efficiency: Implementing better quality and risk management processes and systems can help optimise performance. These systems can help businesses improve their products and services, reduce errors and defects, prevent accidents and losses, and foster creativity and innovation.
- Earning a good reputation: ESG can also help businesses build trust and loyalty with their customers, employees, investors, and regulators. By demonstrating their commitment to ESG values, such as social responsibility, ethical conduct and transparency, these businesses can differentiate themselves from their competitors.
- Attracting talent: An ongoing commitment to ESG can help businesses recruit and retain the best talent for their business. This will resonate with the younger workforce, who are increasingly mindful of sustainability and social issues. By offering a positive and inclusive work environment, more flexible avenues of compensation and investment in charitable causes, businesses can motivate and better engage their employees. Such initiatives can also help reduce turnover and contribute to workplace culture.
- Governance for long-term success: Strong governance can help ensure that businesses operate transparently and ethically, fostering trust among their stakeholders. This is especially relevant for family businesses facing the challenges of ‘passing the torch’ to the next generation, where governance can act as a guiding force. This can help streamline the transition process, maintain accountability, facilitate seamless succession planning and secure a business’ long-term future.
The path forward
The message is clear: to thrive in the modern world, private businesses in Australia must prioritise ESG. Not only does this resonate with the values of modern consumers and employees, but it also makes sound financial sense. By embedding ESG principles into their core strategies, businesses can realise cost savings, enhanced productivity, and a competitive edge in their marketplace.
We’re here to help
To assist private businesses in navigating ESG and sustainability, we offer a tailored approach taking into consideration the business’ current position including size, budget and resources. We create ESG frameworks and plans that allow private businesses to direct their commitment to areas that make the most sense.
If you would like to learn more, please reach out to one of our ESG specialists today.
Learn more about how our ESG and Sustainability services can help you
