BY ROBIN GHOSH ,
ECONOMIST AND BUSINESS MENTOR
KOLKATA, 26 JANUARY 2024:
Entrepreneurs and business enterprises, as of today, are generally rated on the basis of financial performance.
But now, a new yardstick is being considered in terms of ESG innovativeness.
Not many are aware of ESG. What is ESG? Let us understand this first.
ESG stands for Environmental, Social and Governance.
This is a new yardstick which investors are applying while investing and evaluating new business opportunities.
Apart from investors – many pressure groups – have emerged forcing companies to improve their social and environmental scores.
Concern for environment and social upliftment is going to affect how business in future will be conducted. Be it in the sphere of marketing or supply chain management. We are entering into an era of holistic management.
And, therefore, conventional business models will need to be reformatted, re-amended and reformed.
When we are talking of change in the business model, we are referring to change – from transactional model to services model.
To cite an example, Ikea, the furniture company, adopted a circular business model. Instead of selling furniture to customers, it has adopted leasing furniture to customers.
Getting customers to bring back furniture to the store or repurchase by the company is a kind of ESG innovation.
In order to introduce ESG innovativeness , it must be understood – is a call of the top brass of the company. Leadership has to come from the headquarter and not from the local branch office.
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