In an increasingly competitive world, marked by events like the war in Ukraine and climate disasters that disrupt markets and supply chains, good environmental, social and governance (ESG) practices can give Canadian exporters a step ahead of the competition.
ESG strategies are now part of the arsenal of entrepreneurs and exporters wishing to expand, particularly internationally. SMEs increasingly recognize that strengthening sustainable business practices will make them more competitive by mitigating risk, creating new business opportunities and increasing their access to capital. Regardless of size, all companies need to recognize the importance of implementing sustainable business practices, and this commitment needs to be supported by the management team, says Export Development Canada (EDC).
Remember that the acronym ESG brings together all the environmental, social and governance factors that define the behavior of a company in terms of sustainability and ethics. A good strategy in this area can considerably raise a company’s profile in the market and give value to its products and services, while demonstrating that its managers are investing in reducing the negative effects of their activities on populations and natural resources. It’s kind of proof of social and environmental integrity.
Reducing your carbon footprint, one action at a time
Nowadays, due to the climate crisis, economy and environment must go hand in hand to ensure the future of the planet. As a growing number of countries, organizations and businesses are determined to achieve carbon neutrality by 2050, sustainable business practices are now a must for anyone who wants to succeed in global markets. EDC sees them as a guarantee of long-term success, and the Crown corporation is committed to helping Canadian companies be recognized as leaders in this field internationally.
Actions that can be taken include reducing energy and water consumption, reducing waste, optimizing inventory management, adopting renewable energies, implementing energy-efficient processes, reducing greenhouse gas (GHG) emissions and reducing deforestation. Not to mention building supply chains with minimal impact on people and the planet.
These changes require time and investment, of course, but they also allow consumers to score points. Consumers increasingly want to know whether the products they consume come from responsible sources, both environmentally and socially, and they are willing to pay more to obtain this information in full transparency.
Respect human rights, here and elsewhere
A good ESG strategy must also promote respect for human rights and social equity. Workplaces that are inclusive, fair and representative of diversity are proven to provide employees and business partners with greater opportunities for success. The social values of companies and the way they treat people now occupy an important place in the analysis of business prospects, in Canada and abroad.
A growing number of export credit agencies like EDC have put in place monitoring mechanisms to measure the social acceptability of business practices. Among the factors that are evaluated are working conditions, compliance with health and safety standards, compliance with codes of ethics and inclusion and, finally, the overall approach to the issue of human rights. . This analysis focuses on Canadian companies, but also on all of their potential customers on international markets. The ultimate goal: to participate in the advent of a fairer and more inclusive society, where human rights are respected and where everyone can flourish.
Opt for irreproachable business ethics
Third element of the ESG triad, sound governance is essential to integrate good sustainable practices, whether environmental or social, within organizations and societies. Governance issues affect the very structures of the company, including its board of directors and its management team, as well as the policies, procedures and controls put in place to conduct business in an ethical manner.
Good governance also affects tax strategy, compensation, political lobbying, the fight against corruption and diversity. Companies’ performance in these areas is increasingly scrutinized by customers, investors, stakeholders and employees. EDC is very sensitive to this, and ESG factors are now part of its due diligence process when it comes time to assess projects and grant financial support to exporters.
The benefits of a strong ESG strategy
Organizations that have integrated sustainability values into their corporate culture and activities – whether in risk management, operations or social and environmental initiatives – are better positioned than others to attract capital investment, which they often obtain at lower cost. In addition, many investors turn their backs on companies that do not apply proper governance practices.
For organizations wishing to expand internationally, failure to comply with ESG factors limits access to working capital and sends a negative message in the market. Studies show that consumers prefer sustainable brands, as well as products from an environmentally friendly and socially active company.
ESG solutions also, let’s not forget, encourage innovation and growth while mitigating risk, as they inspire Canadian entrepreneurs to explore new – and better – ways of doing business. These innovations can also lead to interesting opportunities for growth. We should also note the HR advantage, because young recruits, who are particularly sensitive to social and environmental issues, prefer to work for companies that have adopted ESG principles.
A constantly evolving market
As an export credit agency, EDC has a duty to operate with respect for human rights by valuing sustainable practices in its culture, communications and analytics. Wishing to help its clients take ESG criteria into account in the development and competitiveness of their business, the state-owned company plays a leadership role and acts as an influencer with financial institutions.
To learn about ESG standards and how they can help you achieve your export goals, watch EDC’s free webinar,
Building your business by taking advantage of ESG factors.
Are you interested in exporting?
Export Development Canada (EDC) helps Canadian companies of all sizes succeed abroad. We give them the tools they need to thrive with confidence. We use our unique business knowledge and financial solutions to support and grow sustainable trade between Canada and the rest of the world, as well as the country’s competitiveness in the international market.
This content was produced by Le Devoir’s special publications team in collaboration with the advertiser. Le Devoir’s editorial team had no role in the production of this content.
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