ESG, which stands for Environmental, Social, and Governance, is often a key player in investment decisions.
Investors use a company’s ESG score to determine if their values are in sync with their investments. Lately, employees have also been turning to ESG scores to see if their workplace practices hit the right notes on their value scale. While ESG and Corporate Social Responsibility (CSR) might sound like two sides of the same coin, they play different roles. ESG is all about measurable metrics—think of it as the scorecard for values. CSR, on the other hand, is more of a philosophical compass, offering guidance without a precise measure.
Last year, the Companies and Intellectual Property Commission (CIPC) in South Africa launched an exciting mission to roll out ESG reporting alongside XBRL filing.
What started as a voluntary initiative in Q4 2023 is gearing up to become mandatory by 2025.
The move is designed to hold companies accountable and shine a light on transparency. Not only will ESG reporting boost internal decision-making, but it will also build trust with stakeholders. So, South African businesses, it’s time to get a head start and prepare for this upcoming requirement!
Let’s take a closer look at the three pillars of ESG
- Environment refers to the company’s influence on the environment in terms of carbon emissions, greenhouse gas emissions, how the company is addressing climate change, deforestation, biodiversity, waste management and pollution.
- Social refers to the company’s influence on people (internal and external to the company), the community and its approach to human rights & labour laws, diversity and fair treatment of all people as well as supporting underprivileged communities.
- Governance refers to how a company policies itself, this includes the leadership structure, executive compensation, board management practices, rules on corruption, conflicts of interest, bribery and financial integrity.
Should we prioritize our ESG score to win recruits?
In a country where basic necessities are still unevenly distributed and the unemployment rate hit a staggering 32.1% in Q4 2024, can job seekers really afford to dismiss a company simply because of its ESG performance? As the economy faces a downturn, can we realistically expect businesses to prioritize sustainability and charity when survival might be at stake?
On an international level, even first-world countries have reported a decrease in investors’ interest in businesses with a good ESG score. Many have stated that although ESG has the good intention of keeping companies accountable, it can also encourage greenwashing, which is when a company appears to be conscious of the environment just as far as the red tape can see.
So, to do some of our own research, we posted a poll earlier this month asking how heavily a company’s ESG efforts influence the job searcher’s decision to apply for a job.
And the results are in!
The poll results reveal a sharp divide: most voters either felt that a company’s ESG approach has a huge impact or none at all.
Interestingly, when we break it down by age, it’s mainly Gen Z who are swayed by a company’s ESG stance. However, there’s a twist—some Gen Z voters were also in the camp that ESG makes no difference to them whatsoever.
What do you think?
At RAiN, integrity is a cornerstone of our business. We believe that ESG shouldn’t be a checkbox to impress recruits or the public. Instead, it’s about making genuine, sustainable choices in our daily lives, whether or not it’s mandated. Imagine a future where birds still serenade us from the trees and the sky remains visible through clear, unpolluted air.
That’s the kind of world we should all be working towards — .
