Environmental, social and governance strategies

ESG stands for Environment Social and Governance. It is a framework that companies use, in the same way as CSR, to assess their sustainability. While CSR has a higher focus on corporate volunteering or engaging with charities, ESG provides a more quantitative measure of sustainability and improve the valuation of the business. In some cases, the lack of tangible ways to measure CSR efforts and the large scope of issues covered in the CSR make it difficult to manage or quantify the actions made and their results, and companies fail to implement CSR initiatives. Therefore ESG is being increasingly used, and it currently tends to overtake the CSR framework in the corporate work thanks to this quality of making corporate ethical activities and efforts measurable. However, the two are complementary.

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ESG is made of three factors:

1. Environmental

This factor is about the effort made by the company to address climate change through limitation of GHG emissions, waste management or energy efficiency measures.

Examples of environmental criteria:

– Addressing climate change by reducing the GHG emission in the production processes

– Addressing water scarcity by improving dyeing methods

– Reduce pollution by banishing the use of chemicals

– Protection of biodiversity, protection of wildlife, banishing furs.

2. Social

This factor includes the labour standards in the supply chain and the respect of human rights, allowing workers to live with dignity. It also pays attention to health and safety in the workplace. Finally, it is about the positive actions that the company can have on the local community.

Examples of social criteria

– Respect of the labour standards, ensuring that all workers are paid at least the minimum living wage (and not minimum legal wage)

– Recommendations and respect of health and safety measures, care to working hours, use of PPE (Personal Protective Equipment), light, regular breaks, etc.

– Gender equality and diversity in the workplace. Women empowerment

– Relation with the local community: sponsoring events, supporting causes, etc.

3. Governance

Corporate governance is about the system that sets the relations among the stakeholders in the company. It is made of rules, duties and rights and responsibilities.

Examples of governance criteria:

• Composition of the board of executive
• Data protection
• No corruption
• Transparency on all operations and regular audits

The textile and apparel industry is accountable for sustainable harmful practices, however, major companies are also initiating changes as it becomes critical to increase the responsibility of the corporation to answer the growing customers’ demand in sustainable products.

Some leading brands are working to create alternative fibers that are more environmentally friendly, and practice circular design and manufacturing, they are keener to commit to social causes and support fair labour practices, and transparency is increasing thanks to new regulations such as the CSRD directive on Corporate Sustainability Due Diligence mentioned in our Business Models Module. However, there is still a long way to reach a highly responsible sector, which is why awareness raising on ESG paradigm is so important.