With the clear evidence that the planet is in the early stages of a climate crisis, sustainability has become a bigger concern than the simply personal. Businesses too are expected to take an environmental sustainability and governance (ESG) approach to their operations — by investors and other stakeholders, business partners, employees and consumers, who are showing preference for brands presenting strong sustainability stories.

While this trend is prompting businesses to take a fresh look at the way they do things, adopting ESG values can also provide opportunities for achieving cost savings and building stronger relationships with the communities where they operate — and their customers.

Smaller businesses are particularly well positioned at a grassroots level to grow their connections by adopting ESG principles in their practices, employment policies, partnerships and community engagement, without pressure from shareholders or having to dismantle existing large scale corporate models.

The 3 pillars of sustainable practice

Environmental sustainability is concerned with your business's carbon footprint and applies to actions to reduce carbon emissions and wastage in energy, materials and water. It can also involve seeking more energy efficient solutions to business functions and packaging, for example, and forming supply chain partnerships with other organisations with the same standards and values.

Social sustainability centres on the human factors in your business and those that you partner with, particularly in regard to modern slavery and human trafficking. In addition to providing safe workplaces that protect your employees' emotional and physical wellbeing, it also encompasses equal opportunity employment and career advancement practices. These need to demonstrate diversity and the absence of discrimination on the basis of ethnic background, religious beliefs, age, gender or sexual preferences.

For small to medium businesses governance or economic sustainability translates as supporting local communities: through employment, partnering with other businesses in local procurements, and charitable activities such as sponsorship, volunteering and forming philanthropy relationships.

Benefits for SMEs adopting ESG values

Adopting sustainable business practices can achieve savings through energy and water use savings and opting for solar power, low energy lighting and electric vehicles to not only reduce your carbon footprint, but also running costs.

Being able to tell a compelling sustainability story about your business can help attract quality talent as company values that people are proud to align with are becoming an important differentiator in employer preferences.

It can also help build your brand and your customer base among those who share the same principles and want to contribute via their purchasing decisions. Ideally commitment to sustainable values should be embedded in your business's mission statement.

Practical support for maintaining ESG values

From an internal management point of view it's useful to have sustainability advocates involved in guiding the decision making process. Gallagher has its own Global Chief Ethics Officer, Tom Tropp, who heads up this area for the company.

And for external support there are governmental and peak resources that businesses can interact with and make connections through their networks. These include

How Gallagher can help

Recognised as a World's Most Ethical Company year on year, the only insurance brokerage to win this accolade, Gallagher is uniquely positioned to assist like-minded businesses seeking to put their ESG principles into action through their partnerships. Talk to one of our industry experts about protecting your business.

Learn More

Disclaimer

Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient's industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers' control.

Gallagher publications may contain links to non-Gallagher websites that are created and controlled by other organisations. We claim no responsibility for the content of any linked website, or any link contained therein. The inclusion of any link does not imply endorsement by Gallagher, as we have no responsibility for information referenced in material owned and controlled by other parties. Gallagher strongly encourages you to review any separate terms of use and privacy policies governing use of these third party websites and resources.

Insurance brokerage and related services to be provided by Arthur J. Gallagher & Co (Aus) Limited (ABN 34 005 543 920). Australian Financial Services License (AFSL) No. 238312.