Responsible growth encompasses every aspect of a company’s operations – not just its financial performance but also its governance practices and social and environmental (ESG) practices. ESG encompasses a broad range of business issues including employee and product safety, diversity, environmental stewardship, waste management, employee recruitment and retention, community contributions, economic development, human rights, board independence, regulatory compliance and corruption. ESG management can be either a risk or an opportunity to enhance value.
Never before have these “ESG” aspects of business mattered more.
- According to a 2017 survey, 98 percent of institutional investors say a company with strong ESG initiatives makes for a more attractive investment.
- The majority of Millennials (62%), today’s largest employee group, consider a company’s social and environmental commitments when deciding where to work, (Source: Cone, 2016 study.) The same study says 70% said they would be more loyal to a company that helps them contribute to social and environmental issue.
- Investing based on ESG/sustainability impact also is growing in importance. Among 18-29 year olds surveyed, 85% say their investment decisions are a way to express their social, political and environmental values. (Source: 2016 U.S. Trust Wealth and Worth Survey)
Even private, small and business-to-business companies can benefit from a stronger focus on ESG factors. Environmental, social and governance issues can be a new lens for executives seeking innovation, cost-savings and new market opportunities and are a reliable proxy for good management. For example, local food companies have developed whole new product lines from consumers asking for fair-trade and organic ingredients. Other local companies have proactively sought out suppliers from the minority community to diversify their supply chains. Others have found ways to cut their waste and save money in the process.
The bottom line: Companies that pay attention to their social, environmental and governance performance will be rewarded – both today and tomorrow.