3 discussion responses with references

3 discussion responses with references:

Original information: Many organizations view environmental, social, and governance (ESG) as a necessary component of their company’s business strategy. The shift from profits first has led to new corporate programs, policies, and initiatives.

Create one initial post and respond to at least two of your classmates.

For your initial post, address the following:

• What are some common examples of ESG elements in organizations? Provide one example for each pillar and outline why each one is important.
• What might be a company’s motivation to include ESG in their business practices? Provide one possible motivation.

Which of the three pillars of ESG do you think is the most important and why?

For your response posts, address the following:

• Based on the company’s motivation outlined by your classmate, what should the company incorporate in their business practices to meet their ESG goals?

Do you agree with your classmate’s rationale about which pillar is the most important? Why or why not?

1. What are some common examples of ESG elements in organizations? Provide one example for each pillar and outline why each one is important.

One environmental example in organizations is carbon footprint reduction initiatives. Many tech companies are committing to becoming carbon-neutral by a certain year, such as Microsoft, which aims to be carbon-negative by 2030. Reducing carbon emissions helps combat climate change, which is a significant global challenge (Microsoft, n.d.). Companies that actively manage their carbon footprint can mitigate regulatory risks, enhance their reputation and attract environmentally conscious consumers and investors.

Implementing diversity and inclusion programs is another example of what organizations are including in their business strategy. Diverse teams often bring a wider range of perspectives and ideas, which can enhance problem solving and creativity. For example, Google has heavily invested in diversity and inclusion efforts to better reflect the global user base and create a more inclusive work environment (Diversity Annual Report – Google Diversity Equity & Inclusion, n.d.). Creating a diverse and inclusive workplace can improve employee satisfaction, innovation and company performance.

An example of governance is establishing transparent and ethical financial reporting practices. In addition to helping to prevent fraud, boost investor confidence and ensure regulatory compliance, many businesses today adhere to strict standards like the Sarbanes Oxley Act (SOX), which mandates strict reforms to improve financial disclosures and combat corporate fraud (Kenton, 2024). Transparent financial reporting also ensures that stakeholders can trust the company’s financial health and practices.

1. What might be a company’s motivation to include ESG in their business practices? Provide one possible motivation.

Risk management and long-term value creation may be a company’s motivation to include ESG in practice. Companies that proactively address these aspects can avoid regulatory penalties, reduce operational risks and enhance their long-term value. For example, social expectations and environmental regulations are increasingly influencing market dynamics. By incorporating ESG factors into business practices, companies can capitalize on opportunities and manage a variety of risks that may not be immediately apparent. For instance, Unilever’s dedication to environmental stewardship and sustainable sourcing reduces supply chain risks and conforms to changing consumer preferences, supporting resilience and long-term profitability (Unilever Sustainable Living Plan, 2023).

Which of the three pillars of ESG do you think is the most important and why?

The Environmental pillar of ESG may be the most significant of the three, despite the fact that all three are vital. This is because environmental sustainability is critical to the long-term survival of our planet and its inhabitants. Addressing environmental problems like pollution, resource depletion, and climate change is necessary to guarantee a sustainable future for everybody.

2-What are some common examples of ESG elements in organizations?The three pillars of ESG are the following.

• Environmental – this pillar evaluates how an organization acts as a responsible citizen and protector of the environment (Leeman, 2023). An example of this element would be an organization’s efforts to minimize its carbon footprint (Leeman, 2023). By minimizing its carbon footprint, the organization is showing that it’s concerned about the community, and the long- and short-term aspects of the area it operates in.
• Social – this pillar evaluates how an organization conducts its relationships with all stakeholders including communities in their areas of operations (Leeman, 2023). An example of this element would be an organization’s efforts to incorporate a program of diversity, equity, an inclusion (DEI) (Leeman, 2023). DEI helps to incorporate all the best aspects of different members of the organization, while encouraging participation and collaboration.

Governance – this pillar incorporates all aspects of organizational leadership, internal control mechanisms, and the rights and obligations of all stakeholders (Leeman, 2023). An example of this would be to ensure that the organization pays its fair share of federal, state, and local taxes (Leeman, 2023). This is important to show that the organization is a good citizen, is paying their way, and is not a drag on society.

• What might be a company’s motivation to include ESG in their business practices? By utilizing the principle of transparency, the organization minimizes the risk of experiencing a sudden and drastic loss in value and stakeholder confidence when illegal and or risky business practices are uncovered (Leeman, 2023). The element of transparency acts as a deterrent to bad acts and enables the organization to get out in front of the narrative when bad acts happen.
• Which of the three pillars of ESG do you think is the most important and why? I think all three are equally important. The elements of taking care of the environment you’re operating in, taking of the people you work with and the communities you operate in and following the laws and socially accepted practices are of equal importance and make good business sense as well as good sense as community and national citizens.

3-Environmental, Social, and Governance (ESG) criteria are the three key components in organizations that assess and improve their sustainability and social impact, measuring environmental protection, social responsibility, and corporate governance. They help companies understand their impact, manage risks, and seize opportunities in changing societal expectations (The Investopedia Team, 2024).

Environmental Component

This is a set of indicators used to measure corporate environmental sustainability. Many companies commit to reducing their carbon footprints. For example, Microsoft has pledged to become carbon negative by 2030. They will remove more carbon from the environment than they emit (Gomez and Hacker, 2024). Also, Tesla’s mission is to accelerate the world’s transition to sustainable energy. The company’s electric vehicles aim to reduce reliance on fossil fuels, and their solar energy products promote renewable energy use.

Social Component

The social component addresses an organization’s relationships with its employees, suppliers, customers, and the communities in which it operates. It emphasizes fair labor practices, community involvement, diversity, and human rights. Companies that perform well in this area often experience higher employee morale, better customer loyalty, and reduced operational risks (Gomez and Hacker, 2024). For example, Starbucks has implemented comprehensive employee benefits, including healthcare, education benefits, commuter benefits, and stock options for part-time employees. This focus on employee welfare leads to higher retention rates and improved customer service (Starbucks, 2024).

Governance Component

The governance component involves the systems, processes, and policies that direct and control an organization. It includes board diversity, executive compensation, ethical behavior, and shareholder rights. Good governance ensures accountability and transparency, which are crucial for building trust with stakeholders (The Investopedia Team, 2024). For example, Starbucks is a global company, and it has established aa diverse board of directors and adheres to high ethical standards. The company outlines its commitment to ethical business practices, emphasizing responsibility to customers, employees, communities, and shareholders. This strong governance structure helps manage risks and foster long-term growth.

In conclusion, by focusing on environmental stewardship, social responsibility, and strong governance, companies can mitigate risks, enhance their reputation, and create long-term value for stakeholders and the public.