If companies do not take ESG factors into consideration as part of their business strategy, they may find themselves exposed to risks such as reputational damage and poor financial performance. However, when properly integrated into the business strategy, ESG factors can be turned into business opportunities.
One example of a potential environmental risk is waste management. If managed improperly, waste management could have a negative impact on a company. Globally, a third of all food is wasted, which is detrimental to the environment. For supermarkets, throwing away food that has passed its expiry date it is costly and it could also damage the supermarket’s reputation with the public. To tackle this issue, several Nordic supermarkets are working to minimise waste by reducing the price of food that is near its expiry date or by using this food in their cafeterias.
The chemical industry is an industry subject to several ESG risks. In this industry, social factors such as product safety and the health and safety of the employees are particularly important ESG factors to be taken into consideration. Companies need to have the relevant environmental permits and processes in place for handling toxic gasses properly. Risk can be mitigated by ensuring that all employees involved in the production of chemicals have received appropriate training and know how to deal with accidents. By doing this, companies can turn risk into a business opportunity, which may ultimately help attract and retain employees.