The Importance of ESG in Shaping Global Business
ESG for breadth: In an era of heightened awareness about sustainability and ethical practices, Environmental, Social, and Governance (ESG) criteria have emerged as a pivotal aspect of corporate performance. ESG encompasses an organization’s environmental impact, social responsibilities, and governance structures, providing a holistic performance framework along financial metrics.
The environmental pillar focuses on how businesses manage ecological risks, such as climate change, resource depletion, and pollution. Companies adopting green technologies and reducing carbon footprints mitigate regulatory penalties and appeal to eco-conscious consumers and investors. For instance, transitioning to renewable energy sources can enhance long-term resilience amid global efforts to combat climate crises.
Social factors examine a company’s relationships with stakeholders, including labor practices, diversity, human rights, and community engagement. Prioritizing fair wages, employee wellness, and inclusive policies fosters innovation and loyalty, reducing turnover and reputational risks. Labor exploitation can swiftly damage brands, as has happened in some supply chain controversies recently.
Governance involves ethical leadership, transparency, and accountability, such as board diversity and sound strategic direction from boards. Strong governance builds investor trust, ensuring sustainable decision-making and compliance with international standards.
Looking ahead: ESG is integral to global business evolution. With regulations like the EU’s Sustainable Finance Disclosure Regulation and investor shifts toward ESG funds, projected to exceed $50 trillion by 2025, companies ignoring ESG risk obsolescence and isolation. In emerging markets, ESG integration can drive inclusive growth, attracting foreign investment and aligning with UN Sustainable Development Goals. Future-oriented firms like those in tech and finance must therefore embed ESG into strategies
Ultimately, ESG is not a trend but a necessity for enduring success. By embracing it, businesses contribute to a sustainable global economy, balancing profit with planetary and societal well-being.
Where we are: At FRIENDS Consult, we started preparing four years ago. Our management and staff have taken courses and gained practical experience in ESG aspects, working with partners/ clients like aBi Finance, aBi Development, FSD Uganda, the Africa Guarantee Fund, HOFOKAM Microfinance, Centenary Bank, ICGU, Grameen Foundation and others. Later in 2026, we shall work with partners to broaden and deepen the adaptation of ESG principles by clients especially in the financial sector.
By Dr. Keren Obara.
Projects Officer, Marketing and Innovations.