What exactly is ESG? What's the difference with DEI? Let's take a look at the analysis!

Sustainability has become a prominent science in recent years, and ESG is a common concept, what is ESG? Why should companies focus on ESG?

In Taiwan, since 2020, the FSC has been committed to promoting ESG goals for Taiwan's listed companies and financial industry, with the aim of reducing the risks arising from climate change and ensuring that resources are invested in sustainable enterprises.

In addition, according to the "Global Investor ESG Survey Report" released by Zicheng United CPA in 2021, 79% of investors said that how companies manage ESG risks and opportunities is a key factor influencing investment decisions. According to Zicheng's 2023 Global Consumer Insights Report, nearly eighty percent of consumers are willing to buy locally produced or sourced products at higher prices.

Whether a company invests in ESG will affect its investment decisions and consumers' favorability of the brand.

(Recommended reading: ESG Issues Nielsen Survey: Generation X values environmental protection, Generation YZ values diversity and inclusion)

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What is ESG?

ESG was proposed in the 2004 United Nations report as an abbreviation for Environmental, Social and Governance, and is an important indicator to assess whether a company can operate sustainably.

  • Environmental: Used to assess the environmental impact and sustainability of a company, such as greenhouse gas emissions, carbon footprint, waste disposal, energy use and other issues.
  • Social Responsibility: It is used to evaluate how enterprises deal with the rights and interests of stakeholders, such as managing suppliers, labor relations, customer privacy, diversified workplaces, etc.
  • Governance: Used to evaluate the company's governance and transparency, such as corporate oversight policies, board composition, business ethics, information disclosure, etc.

In general, ESG pays more attention to corporate management and investment, and is also a means to achieve sustainable development goals.

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What are the benefits of implementing ESG?

In recent years, due to the impact of climate change, the epidemic and other phenomena, the world has begun to pay attention to sustainable development, and enterprises have begun to think about how to reduce risks. Not only that, ESG is also regarded as a criterion for whether to invest and lend.

Here's a quick list of the benefits of ESG implementation:

  1. Reduce operational risks: In addition to reducing the losses caused by natural disasters, enterprises can also reduce reputational, legal and other litigation risks, so as to help enterprises safeguard long-term interests.
  2. Develop new business opportunities and talents: ESG promotion can stimulate companies to develop new sustainable business models, and attract talents who also pay attention to ESG performance to enter the workplace.
  3. Enhance international competitiveness: Many international companies require manufacturers to provide sustainability reports, so strengthening ESG implementation and disclosure can help enterprises enhance brand competitiveness.
  4. Review of corporate development: By assessing the three major aspects of ESG of a company, it can help companies understand their own development shortcomings and respond faster to social and environmental needs.

(Read more: Working together for a green future: Watsons and Kenvue, Léal and P&G Overseas Chinese Goods Drive Sustainable Development)

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How can companies implement ESG?

There are many cases of companies implementing ESG at home and abroad, such as the cooperation between the American outdoor sportswear brand Patagonia and non-governmental organizations to advocate marine conservation and stop indiscriminately capturing marine life; Domestic start-up Green Vine uses recycled packaging on its products, and promotes a people-oriented organizational culture by promoting talent tests to help colleagues understand their talents;

TSMC, known as the sacred mountain of protecting the country, has also established an ESG committee to promote green manufacturing, establish a diverse and inclusive workplace, and create a responsible supply chain.

These cases show the multiple possibilities for enterprises to implement ESG, and also reflect the new trend of diversity and inclusion (DEI) development.

How is ESG different from DEI?

DEI is an abbreviation for Diversity, Equity, and Inclusion. Practicing diversity and inclusion is to respect and maintain everyone's differences, create a diverse and inclusive environment, so that everyone can be fearless and become themselves.

The difference between ESG and DEI is that DEI goes deeper into the S and G parts, including the social responsibility (Social) category that strengthens employee relations, employee care, and social impact, and promotes corporate governance that promotes diversified recruitment of talents and diversified composition of the board.

After ESG, DEI will be an important puzzle piece for complete sustainable development. If you also want to create a DEI inclusion circle, women's fans offer course training, digital media coverage, a diversity and inclusion vision award, and a corporate vision meeting.

Invite you to practice DEI with us!

(In the same session: How is CSR, ESG, SG, SG, and DEI (diversity and inclusion)?) Understand the strongest way to understand the sustainable operation of enterprises at one time!

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