But as we pointed out before, there are other positive effects. McKinsey cites more than 2,000 academic studies that conclude that Better ESG scores translate to approximately 10% lower cost of capital. MSCI Inc, a provider of financial analysis tools, confirmed these benefits through a four-year study. His research found that companies with high ESG scores experienced lower costs of capital and lower costs of debt compared to companies with low ESG scores.
Regarding operational benefits, the University of Oxford highlighted that 88% of the companies studied confirmed that they improved their operational performance thanks to the management of their ESG programs.
The food industry accounts for 70% of global freshwater withdrawal and a quarter of all global greenhouse gas emissions, soon food production will be subjected to the same levels of scrutiny as the oil industry.
Globally, the regulators are adopting ESG mandates to regulate the behavior of companies and investors.
A few days ago the European Union approved a Law that seeks to guarantee that products imported into the region have not been produced on deforested lands. The standard covers products such as cocoa, coffee, soybeans, palm oil, wood, beef and rubber. And it also concerns various derived products such as leather, chocolate, furniture, paper and charcoal, according to the text reached after lengthy negotiations between the European Parliament and the EU Member States. It is something specific but what perfectly illustrates the trend of these aspects.
Smart companies are taking advantage of the opportunity to demonstrate your ESG policies. Faced with these changes in demand posed by society, there are those companies that they will have to rethink their business to be able to operate in the main countries of the world and there are those that have already started and the new demands that limit their competitors will be growth opportunities for them.
Eighty percent of transactions in the last year, noted a famous US law firm in a recent interview, have involved ESG considerations in your business model. It is an essential part of due diligence and an important consideration for investors.
There are strategic, reputational, financial and operational reasons to focus and dedicate efforts to ESG considerations. In any case, the regulations and controls will increase and regardless of the moral values of the shareholders and managers of companies, reality pushes you to transform the negative impacts of your business into positive ones.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
