IS ESG JUST A PR STUNT?

ESG stands for Environmental, Social and Governance.

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This concept evolved in the mid-2000s and traces back to many factors ranging from growing awareness of climate change, social inequality, and the importance of good governance. All these factors have put pressure on companies to act responsibly.

Nowadays, consumers are more inclined to buy products from companies that value sustainability. Similarly, investors are more interested in investing in companies with strong ESG performance.

But why should businesses care about ESG? Well, it's not just about altruism, there are real financial incentives involved. A business with a strong ESG record attracts more investment, fosters consumer loyalty, improves the brand's reputation and reduces costs.

When Greenwashing Enters!

As vital as ESG sounds, it has led to the rise of Greenwashing, a concerning phenomenon. It refers to a scenario when businesses mislead consumers and investors about their ESG efforts with the prime purpose of uplifting themselves and improving their image in society. Rather than making an actual impact, they pretend to be investing in ESG policies.

For instance, in the early 2000s, British Petroleum rebranded itself as 'Beyond Petroleum' to present itself as an environmentally conscious company. While the rebranding, as the name suggests, would hint at it being environmentally safe for society, it continued its focus on fossil fuels, and its investments in renewable energy remained relatively minimal. Then, what's the point of calling oneself environmentally conscious? This difference between rebranding and actual business practices helps us understand greenwashing in a deeper sense.