How can we better articulate the benefits of managing environmental, social and governance issues for businesses and wider stakeholders?

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The argument about ‘enhanced brand value’ is interesting. That is likely true for a good portion of a company’s customer/client base, but ESG is increasingly anathema for others

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Investors are overwhelmingly in favor of being able to take risk factors into account when making investment decisions: “More than 80% of U.S. investors say that companies need to
more openly communicate the risks and opportunities that shape their standing as “responsible
investments” – and 73% also say they are more likely to invest in a company that shares with
investors its plans for effectively managing those factors.” Link to the survey: Nuveen Survey: Investors Want More Information From Companies About ESG Issues

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Increased ESG adoption worldwide can be used to assess business performance. There is evidence that ESG disclosure—environment, economic performance, and social sustainability—in the business sector can enhance the sustainability and performance of businesses.
The ESG framework is considered a mechanism that can support the green deal and ensure the implementation of a more sustainable economy
Managing environmental, social, and governance (ESG) factors can contribute to organisations’ environmental and economic performance in terms of investment and sustainability

Adopting ESG policy outcomes enhances manufacturing capacity and the ability to pursue innovation, value-building, and financial performance. Overall, social and environmental performance have demonstrated a positive relationship with economic stability, indicating the interdependence between business value and the building of a value society.

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There should be a clear means to showcase benefits as part of an overall strategy and not just pilot projects of brilliance or innovation … Social innovation comes from Value Co-creation with the eco-system

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" * Attracting and retaining employees, customers, investors, and other stakeholders who are increasingly interested in ESG issues and seeking to align their values with their choices." - this is something we hear more and more from companies. It is a big generational divide, and when it comes to attracting younger talent, ESG is important

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Hi, is this panel been broadcasted live?

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Hey George - we are contributing LIVE. We would love your input too. What do you think to the first question: 1. How can we better articulate the benefits of managing environmental, social and governance issues for businesses and wider stakeholders?

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Fareeda Ehtesham, from the Global Business Coalition for Education. Look forward to the discussion.

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We need to emphasize and reinforce ESG’s shared purpose and mission while aligning them with individual and collective benefit for all as the ultimate aim. Connect with and for values and purpose.
ESG management resonates with stakeholders who prioritize values and purpose. Communicate how a strong commitment to sustainability and responsible business practices aligns with their personal or organizational values.
Emphasize the financial benefits of ESG management to capture the attention of businesses. Research shows that companies with strong ESG performance tend to outperform their peers in the long run. Communicate how ESG practices can lead to cost savings, improved operational efficiency, reduced risks, enhanced brand reputation, and increased access to capital and investment

Frame ESG initiatives as a way to make a positive impact on the world, create a better future, and contribute to sustainable development!

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There are lots of studies connecting good ESG performance to good corporate performance in general, and I think lots of companies understand that, but they have trouble bringing the relationship down to their specific circumstances. So I think a compendium of case studies organized by specific actions companies have taken would be helpful.

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True and we have created a framework that links the Demand Side of an organisation to the Supply Side at the intersection of Market Based Solutions and Value Creation …

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Welcome Karon, thank you for your contributions :wave:

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Welcome Amber - great to have you join :wave:

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Hello everyone - I’m the director of marketing and communication at the Council for Inclusive Capitalism. Glad to be joining this discussion today.

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**Welcome Fareeda - I look forward to your thoughts to question 1 - do hit reply and add your comments in too: **

Our first question: How can we better articulate the benefits of managing environmental, social and governance issues for businesses and wider stakeholders?

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Re. financial performance, there are good studies coming out, but this is still an area of significant questioning / pushback. To add to resources, this study from NYU analyzed over 1,000 studies published between 2015 and 2020 on the relationship between ESG and financial performance. Summaries of its conclusions:

  1. Improved financial performance due to ESG becomes more marked over longer time horizons.
  2. ESG integration, broadly speaking as an investment strategy, seems to perform better than negative screening approaches. A recently released Rockefeller Asset Management study finds that ESG integration will increasingly be demarcated between “Leaders” and “Improvers” with the latter showing uncorrelated alpha-enhancing potential over the long-term (Clark & Lalit, 2020).
  3. ESG investing appears to provide downside protection, especially during a social or economic crisis.
  4. Sustainability initiatives at corporations appear to drive better financial performance due to mediating factors such as improved risk management and more innovation.
  5. Studies indicate that managing for a low carbon future improves financial performance.
  6. ESG disclosure on its own does not drive financial performance.
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Also, many surveys commissioned by foundations and others have found that messages resonating with the general population include: 1. Transparency is good; 2. Freedom to choose is good; 3. Treating workers fairly is good; 4. Interfering with business decisions is bad

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A helpful IEEFA piece on climate risk = investment risk and how the industry - especially institutional investors - has adopted risk management tools to manage risks:

“Institutional investors, arguably among the largest shareholders in companies across the globe, are leading the ESG push. According to a 2020 study of institutional asset owners globally, (95% are integrating or considering integrating sustainable investing) in all or part of their portfolios. It is of higher importance for institutional investors such as insurers and pension funds to incorporate these metrics in investment decision-making as they are typically long-term patient investors who will be among the most affected by ESG risks.”

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Thanks Katie, I think it has to be a organisation-wide agenda to be the good old Corporate Citizen (ethical branding gets well entrenched here as a benefit) … how they do this is by tying their Policies, Procurement, Practices and Partnerships to what they value and the capital they want to create beyond financial - Human, Social and Natural Capital … It also is an indicator of how they leverage both people and money for asset creation

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ESG adoption has effects on corporate reputation, the competitive advantage of firms, and the decision-making of investors and capital providers of business firms