ESG frameworks, at their core, are meant for bookkeeping. Not (only) financial data, but also for materials, energy, and people. This way, you create records that will help to generate management information. The leadership of a company will be able to steer the three fundamentals of business (economy) more insightfully.
Economy is the interplay and exchange of materials and energy turned into an accumulation of materials held together by energy (called products) and is operated and steered by people. This is actually a natural principle that you will find with all life forms and between life forms.
This definition of economy highlights the fundamental principles of resource utilisation, production, and exchange, and places human activity within the broader context of natural systems.
This definition emphasizes the following key points:
- Resource-based: Economies rely on the extraction and utilisation of natural resources.
- Energy-dependent: Energy is essential for the transformation and movement of resources.
- Human-centered: Human ingenuity and labor are crucial for shaping and managing economic systems.
- Interconnectedness: Economies are part of larger ecological systems, and their sustainability depends on understanding these connections.
This perspective aligns with emerging trends in sustainable economics and circular economy principles, which seek to minimise resource consumption and waste. It offers a refreshing and holistic approach to understanding economic systems which aligns very beautifully with ESG.
ESG transformation uses this approach of economy to move from linear practices to circular economy practices.
>> Understanding material flows
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