Three factors that play a role in determining your ESG score
Environmental, social and governance (ESG). These are the criteria that set the standards for a company that investors can use to screen for how ethical, environmentally friendly a company operates. It is important for companies that want investors to consider embracing ESG principles and improving their ESG scores. More investors are socially conscious, especially millennials, and they are just as interested as investing in companies that represent their values as they are in receiving high returns.
A company does not simply become ESG compliant overnight. Earning a high ESG score requires some time and effort, but it is worth it overall if you are wanting to attract socially conscious investors, as well as to even feel better about the way you run your business.
Three factors that play into your ESG score
Reputable auditing companies that perform ESG audits examine your company’s performance in the three main areas of ESG: environmental friendliness, social justice and company governance:
- Environmental — Environmental criteria may include an examination of your company’s energy use, waste production and waste removal strategies, pollution, resource conservation and animal friendliness. The greener your company is in these categories, the better your ESG score will be.
- Social — Social criteria includes a review of your business relationships. For example, do your suppliers, distributors, contractors and other partners have the same values your company claims to hold? Do they treat their employees fairly and have high regard for their health and safety? If your company strives to be ethical in its own practices but does business with others who are unethical, your ESG score will suffer.
- Governance — Governance criteria measures your own business’s ethical and equal treatment of your employees and business partners. Does your business treat employees fairly and provide equal opportunities for employees of any gender, race or sexuality? Does your business avoid shady or illegal practices? This all plays a role in your governance score.
Talk to a ProVise CFP® professional for assistance with your finances
Managing a company and keeping it in alignment with ESG values takes a lot of time and hard work. When you have to dedicate so much to running an ethical, environmentally friendly company, you may lose sight of your personal finances. Your personal finances should not have to suffer because you want to focus on your business. This is where ProVise Management Group comes in.
At ProVise, we offer the Personal Financial Officer™ (PFO) program to help business owners and executives with managing their personal finances so they can focus on the important aspects of their business without worrying about their own money.
Our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a financial plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about managing your personal finances while you focus on your business? Contact ProVise today to schedule a complimentary consultation.