- Isabell Berry
The ESG Trend That Can Actually Make You Money!
Updated: Jan 16
Recent studies have shown that corporations that are truly guided by ESG issues have increased returns by 2-6%!
Many institutions had an ESG mandate which was more of a greenwashing “nice idea” kind of statement than a real focus for their investment and vendor choices. Not only are governments around the world introducing new regulations that will require transparency and accountability in all industries, but it is now proven that organizations that invest in ESG options are reducing their risk and increasing revenue across the board. One way it reduces risk is by diversifying their dependencies on technology, fuel, and commodity sources so they are able to adapt more quickly to industry, regulatory and market shifts. They are no longer the pawns in political or marketplace maneuvering and can also push the buttons on ethical and sustainable sourcing.
A recent global survey was conducted around buying behaviour and sustainability. 85% of people indicate they have shifted their purchase behaviour in the last 5 years. More than a third of global consumers are willing to pay more for sustainable products.
As well, as companies worldwide get closer and closer to their Net Zero deadlines, everyone is scrambling to find new sources of heat (check out my other blog Steam is so Cool to learn about supercritical solar powered steam). While biofuels and wind power feel very innovative, we can’t forget the tried and tested steam. Steam heat has been around since 1745. Steam heat systems are extremely durable, it is efficient, and low cost (while hydrogen for example is projected to cost twice to three and a half times as much as current heating systems).
In a recent EY DNA of the CFO survey it was found that 74% of finance leaders say that investors increasingly use nonfinancial information in their decision-making.
Therefore corporations are measuring CFOs on financial metrics as well as ESG metrics. So the CFOs have a very powerful, very personal reason to implement these standards. This trickles down to their hiring practices, where they will hire people based on agility to respond to changing market disruptions, emotional intelligence and long term vision.
In reality, ESG soon will be table stakes, and corporations will be judged not only on their internal policies and sustainability and diversity position but by who they buy from, partner with and even sell to. The sooner these corporations “clean” up their entire supply chain the more leverage they will have to grab market share in advance of the laggards.