ESR, or Environmental Social Responsibility, refers to a set of criteria that stakeholders involved in businesses use to evaluate the sustainability and ethical impact of a business itself.
"ESR" includes three main categories: environmental, social, and governance.
- The environmental category focuses on a company's impact on the natural world. This includes climate change, pollution, and natural resource depletion.
- The social category looks at a company's impact on people. This concerns issues like labor practices, how you engage with the community or human rights.
- The governance category focuses on how a company is run. Everything from the diversity of the workforce through to company pay are included within this category.
Now that we've introduced the main categories relating to ESR, it's time to explore how Environmental Social Responsibility can affect decision making in businesses.
One of the main ways that ESR can affect decision making in businesses is by increasing the focus on environmental issues. As consumers and investors become more concerned about climate change and other environmental issues, businesses are under increasing pressure to reduce their environmental footprint. This can lead to changes in product design, supply chain management, and energy usage, among other things.
A company might decide to invest in renewable energy sources, as an example, such as solar or wind power, to reduce their carbon footprint. Or, a company might redesign its packaging to be more eco-friendly and reduce waste. These decisions can be driven by a desire to meet ESR criteria and appeal to consumers who are increasingly concerned about the environment.
At Spicers of Hythe, we've made the change to reduce the packaging required to create so many of our gift boxes by 30%. Maintaining the great value of gift items you receive while ensuring your hand-packed gifts arrive safely.
ESR can also affect decision making in businesses by influencing how they approach their core business activities. A company might decide to invest in a new product line that aligns with Environmental Social Responsibility criteria. This could be a product that is environmentally friendly, socially responsible, or ethically sourced.
In addition, ESR criteria can impact how businesses interact with their customers and stakeholders. Companies that prioritise ESR often maintain transparency on their day to day activities. This can lead to better relationships with customers, increased loyalty, and ultimately, higher profits.
It may no longer be all about price when you do business in the corporate sphere. Looking at your suppliers' commitment to the environment alongside their reputation can start to impact your corporate behaviours.
A significant impact can be made on your decision making in businesses, particularly with regards to environmental, social, and governance issues. By prioritising ESR, companies can improve their relationships with customers, investors, and other stakeholders, and ultimately, achieve better financial performance.
As concerns about sustainability and ethical practices continue to grow, ESR is likely to become an increasingly important consideration for businesses of all sizes and sectors. While it may be more costly in the short term setting up more environmentally friendly business practices, this can easily lead to a more financially profitable business decision as more & more prospective customers are influenced by your positive brand.