Environment, Social and Corporate Governance (ESG) have now become the model for corporate accountability. As leaders now commonly prioritize sustainability factors for their business decision-making process.
In Indonesia’s investment sector, for example, the trend of ESG investment shows growth over time. Indonesia Stock Exchange (IDX) reported that in 2016 there is only 1 ESG product in the stock market, and as the latest in 2021, there are 15 ESG-based products in the stock market. From this number only, we could agree that ESG practice development in Indonesia will potentially go broader.
The implementation of ESG practice is wider than it sounds. Because of ESG’s rapid implementation all over the world, the company must strategically measure and report its ESG framework. Several findings explain that women are leading the ESG decision-making in business, and there are various reasons to support this.
Women’s Involvement in Business: The Benefits
Deloitte’s executive survey exposed that the most common categories disclose by companies in reporting the ESG framework is Diversity, Equity and Inclusion (53%), Greenhouse Gas Emissions (49%), Health and Safety (44%), Governance Practices (40%), Water (38%) and Energy (36%). The number shows that gender equality still dominates the topic in ESG practice, making it sensible to put women on the front line to lead the business.
Furthermore, implementing gender equality in the workplace has shown benefits for day-to-day business decisions. As IMF once reported, narrowing gender gaps by reducing barriers to women’s participation in the labor force significantly boosted productivity and growth because women bring new skills to the workplace. Business & Sustainable Development Commission in its report explained that companies with at least one woman on the board had generated a compound excess return of 3.5 percent per year for investors since 2005, compared to companies where the board was entirely male. The report also exposed that gender-diverse company more likely to outperform those with lower gender-diverse by 11 %.
Based on the data, we can conclude that involving women as the main decision-makers is no longer an abstract thing to do, but it has proven to have a significant impact on business.
Many companies have stated their claim to include women as their top leaders and promote their company’s gender-based inclusivity. This must be appreciated and sustained to reach a greater goal.
It is believed that women have more nurturing instincts than men, as they often have preferences for thinking about charity and sustainability. A report shows that 69% of women consider investing ‘for good’ is better than profit orientation, therefore most women investors would likely to look for ESG factors or invest in ESG-based products. The same report says that women prioritize ESG factors with elements, such as human rights, climate change, social justice, and animal welfare.
Furthermore, women leaders tend to point out the environmental issue and would be actively involved in sustainability initiatives for their company. The actions are not limited to sustainability programs but are also implemented on an operational basis such as negotiating with suppliers to measure and decrease the carbon footprint of their products and investing in renewable power and low-carbon products.
Sustainable Impact for a Greater Goal
Net Impact described in the research that women are more interested in taking a job with impact. Furthermore, 60 percent of employed women said it is important to work with a company that prioritizes social and environmental responsibility, compared to men on 38 percent.
Other research says that women are classified as sustainably minded consumers as GlobeScan found that women are more likely to perceive issues such as pollution, conflict, and inequality as important cases to be taken care of. An instinctive trait like choosing sustainability values over others is very useful for the implementation of ESG practices. Therefore, investing more in women is likely the same as investing in the sustainability of your business.
In conclusion, much research has shown that women’s principles mostly align with the ESG framework. Hopefully, higher women’s participation in a company can improve a wider range of influences and benefits to achieving greater goals in the future.