ESG and Social Responsibility: How Companies Shape a Better Future

Abstract

In the context of global challenges related to climate change, growing social inequalities and the need for responsible corporate governance, sustainability is emerging as a key priority in business strategies. The coming period will mark significant changes in the global approach to sustainability. Through innovation, regulation and governance, companies are playing a significant role in shaping a more sustainable future and responding to the most pressing global challenges by implementing ESG standards (E-Environmental, S-Social, G-Governance) and adopting a more responsible approach to society (CSR-Corporate Social Responsibility).

Environmental thematic standards explain how companies manage their impact on climate change, energy and water use, biodiversity and ecosystems, how they manage waste, how they use other resources and contribute to the circular economy. The transition from traditional to sustainable practices involves implementing green practices such as switching to renewable energy sources, reducing carbon footprint, designing products with a lower environmental impact.

Social standards cover a company`s relationships with employees, customers, suppliers, owners and the communities in which they operate. They address diversity and inclusion, fair working conditions, respect for children´s and human rights, health and safety at work, and contributions to local communities.

Governance standards refer to how a company is managed, including business ethics, transparency, control and accountability systems. This includes governance structures, anti-corruption measures, the protection of owners, transparent reporting, respect for labour and human rights, and the management of sustainability-related risks and opportunities. Managing in alignment with the elements of sustainability is very important for ensuring stability and security, and it affects a company ability to attract investment and the trust of investors, especially institutional ones. Over the last decade, due to alarming data related to climate change, several initiatives and legislative frameworks have been adopted: the Paris Climate Agreement, the Sustainable Development Goals (SDGs), the European Green Deal, and EU directives.

The main goal of this paper is to show how S-social components in ESG strategies contribute to the creation a more sustainable future and plays a key role in successful business and profitability in the service of creating long-term value and positive changes in society.