As a factor in enhancing corporate value from a medium- to long-term perspective, consideration of ESG enables companies to gain sustainable competitive advantages.
For example, providing environmentally conscious products and services can attract highly sensitive customers, demonstrate leadership over competitors, and ultimately lead the market. In addition, conducting socially responsible business can also enhance customer trust and increase brand value.
In recent years in particular, companies that are highly rated by ESG investors enjoy significant advantages in terms of fundraising. By receiving support from investors who consider ESG elements, often referred to as impact investing, companies can secure more stable financing and leverage it for risk management and the execution of growth strategies. Furthermore, companies with strong ESG ratings are expected to enhance corporate value not only as publicly listed firms but also through their broader influence.
Conversely, companies that ignore ESG elements may face management risks. For instance, revelations of environmental issues or human rights violations may damage corporate reputation and trust, leading to customer attrition and even declines in sales. In addition, restricted access to funding from ESG-focused investors may hinder the execution of a company’s growth strategy.
Thus, since ESG and corporate value enhancement are closely intertwined, it is essential for any company aiming for growth to remain mindful of these factors.