Is ESG only for companies that can afford it?

Is ESG only for companies that can afford it?   

Over recent years, ESG has become a prominent part of the agenda for regulators, investors and issuers alike. Even the global upheaval caused by COVID-19 did little to remove ESG from the list of urgent concerns. On the contrary, social and governance factors are now taking centre stage as society and investors watch how businesses are responding to the pandemic. Despite this, for some small and medium-sized companies, ESG can seem a costly exercise without clear payoff.

While the current uncertainly around ESG standards and frameworks can be intimidating, it is important that companies understand the negative consequences of overlooking ESG in their strategic decision-making. A good way to look at the cost of ESG implementation is as a trade-off between the necessary expenditure and potential losses brought by mismanagement of ESG factors. In other words, the question should be: Can any company afford to not make ESG part of its overall strategy?