How is ESG Investing Shaping The Future of Sustainable Business

Introduction

When people think of investing, they focus on the metrics such as revenue growth and stock returns. Today, however, there is more to the investing story beyond numbers. A new player has come to the investing arena, and it looks like they are here to stay for the foreseeable future: Environmental, Social, and Governance (ESG). ESG is a set of standards that measures an organization’s impact in three facets: environmental, social, and governance.

• Environmental: Efforts towards reducing climate change, greenhouse gas emissions, deforestation, biodiversity, and carbon emissions

• Social: Impact of practices and procedures regarding ethics and transparency

• Governance: Practices and procedures regarding ethics and transparency

The Rise of ESG Investing

In recent decades, ESG has gained significant attention due to rising concerns and media coverage about climate change, social responsibility, and corporate accountability. While financial metrics are still the most important factor, investors are now also assessing issues such as pollution and fair working conditions when making investment decisions. In response to this market sentiment, companies began including ESG metrics and frameworks in their annual reports. Independent rating agencies, such as the S&P have also begun assigning ESG scores to companies based on their application of these frameworks.

Unilever: A Case Study Into Practical Applications of ESG

Unilever is leading the global consumer goods sector in adapting its operations to align with ESG, with its 2025 report including 15 goals related to climate, nature, plastics, and livelihoods. There is also a correlation between ESG strategy implementation and improved financial performance, as net finance costs decreased from €520 to €503 million and operating profit increased from €8.8 to €9.0 billion between 2024 and 2025.

By 2030, Unilever aims to reduce greenhouse gas emissions from operations by 100%, and the company has made steady progress towards this, with 77% reduction as of 2025. Unilever has also completely removed pollutants such as carbon monoxide and lead from its operations. Other climate actions include reducing palm oil in soap bars and using renewable packaging formats.
Greenhouse gas emissions from operations by 100%, and the company has made steady progress towards this, with 77% reduction as of 2025. Unilever has also completely removed pollutants such as carbon monoxide and lead from its operations. Other climate actions include reducing palm oil in soap bars and using renewable packaging formats.
Unilever currently has a Human Rights Due Diligence (HRDD) program to strengthen human rights policies, with the program expanding to suppliers in the Philippines and Turkey in 2025. Employees are also guaranteed a living wage, which more accurately reflects real-world expenses rather than a rate set by legislation.
While not as developed as their environmental and social actions, Unilever still has governance procedures implemented. Examples include a code of business principles for ethical behaviors, revised every 5 years, and the prevention of late payments to suppliers, especially small and medium enterprises (SMEs).

Long-Term Implications of ESG Investing

The Unilever case demonstrates that ESG strategies create long-term value for both investors and businesses by reducing their operational costs and better positioning companies to mitigate risks from the long-term impacts of climate change. ESG will only continue to gain importance in markets, so companies must continue to emphasize their effective ESG strategies to remain competitive.