By Mark Paterson
Nobody can foresee specific events or disruptions, however, there are trends and forces that shape the future. One of these is sustainability – or what investors call ESG.
Sustainability is a business approach to creating long-term value by considering how an organisation operates in the ecological, social and economic environment.
Sustainability (and ESG, which stands for environment, society and governance) is built on the assumption that such business strategies foster company longevity.
Non-financial risks such as climate change, anti-corruption, health and safety, human rights, resource use, boardroom diversity and land degradation are all part of sustainability and ESG.
How organisations manage these non-financial risks in their business and the related impact from their operations on people and the planet is being watched closely.
Responsible investors prefer to back sustainable companies. Talented people want to work for them. High-value consumers want to buy their brands and products.
This scenario will disrupt business supply chains and erode trust in capitalism. When this happens, the world gets messier. For everyone.
However, risk and opportunity go hand in hand, and those brands and companies that embrace sustainable development, will be positioned to succeed and prosper.
For almost 50,000 companies in Europe, corporate sustainability will soon no longer be a choice. Under the Corporate Sustainability Reporting Directive, reporting how they operate and manage social and environmental challenges will be mandatory.
For the many companies that operate in the EU’s global supply chains, there will be mounting pressure to do the same, no matter where they are located. This is why non-financial reporting is important for listed and non-listed companies worldwide.
Here are three more reasons why sustainability matters to your business:
- The growth of sustainable investing has grown 107.4% since 2012, and accounts for 18% of all assets in the wealth industry (In the US, it is even higher with 33%)
- One fifth of the world’s 2,000 largest companies aim to be carbon net zero by 2050 (the number of net zero commitments has doubled in less than a year)
- Online searches for sustainable goods have risen 71% over the past five years (90% of consumers care about sustainability when buying goods and services)
Due to this sustainability trend, it is almost certain that the dominant system of corporate governance for the past 50 years, shareholder capitalism, will give way to stakeholder capitalism – a model which espouses that companies should look after all their stakeholders – customers, employees, suppliers, communities, and shareholders.
For many of us in sustainability and ESG communications consulting, stakeholder engagement is a company’s first step towards reaching their sustainability goals.
No company should dare to take on sustainability alone. In uncertain times, there is no substitute for strategic counsel and tactical support from intelligent minds.
As a global network of connected thinkers, the Public Relations Global Network (PRGN) offers clients worldwide a unique resource of communications skills and expertise. The PRGN is a trusted companion for brands and companies navigating their sustainable future.
So, it is timely that the PRGN has brought together its experts in sustainability, ESG and responsible investment and set up a dedicated service for assisting clients to:
- Make the UN global goals part of their DNA
- Avoid mistakes made by first-time reporters
- Talk about their position on climate change
- Get involved in social justice issues
- Take steps to boost their sustainability capability
If you are still in doubt about starting or continuing your sustainability journey, here are six reasons why ESG should be a fundamental part of every business strategy.