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While environmental social governance (ESG) initiatives are increasingly becoming standard corporate practice, some organizations are still hesitant to invest the time and capital required to pursue a comprehensive program. In fact, sometimes securing internal buy-in can be the most challenging part of the process. Convincing key decision makers of the value of ESG can seem daunting.
To help you overcome these internal roadblocks, we break down some of the most compelling reasons an organization should pursue an ESG communications strategy to help you make the case to your decision makers.
Key executives and board members are, by nature, focused on the bottom line. Not surprisingly, many question the costs of ESG initiatives and whether they’ll offer any ROI. Given how new the category is, this hesitation is understandable. However, while the costs of creating and implementing ESG programs aren’t insignificant, requiring investments in things like new technologies, processes, and hiring, there are proven financial benefits that make the investment worthwhile.
According to consulting giant McKinsey, the top ESG-performing companies grow 10-20 percent faster than competitors. Another recent European study also found that organizations at the forefront of ESG initiatives are seeing 12 percent higher stock returns. ESG helps companies reduce costs through increased efficiency, attract investment dollars focused on sustainability, and builds resilience against future regulations.
Such results should make even the most bottom-line-driven leaders warm up fast to ESG programs. The data shows ESG delivers tangible financial rewards.
MORE: Shareholders call for ESG due diligence
Nothing strengthens a bottom line quite like happy customers, and research indicates that people are more likely to purchase products or services from companies with ESG practices in place. In fact, 83% of consumers in a recent study said they would pay more for goods that are ethically sourced. Another study found that about 70 percent of consumers surveyed on purchases in multiple industries, including automotive, building and electronics, would pay an additional 5 percent for a green product if it met the same performance standards as a non-green alternative.
With consumers increasingly factoring in companies' ethics and values in their purchasing decisions, implementing an ESG program can be a competitive differentiator that wins business away from lagging competitors.
It’s often said that a company’s most valuable asset is its people, and ESG programs can help companies recruit and retain the best talent. According to a study from Mercer, a global human resources consulting firm, employers with high ESG scores perform 14 percent higher in employee satisfaction. They are also 25 percent more attractive to prospective talent.
Younger generations especially want to work for companies that share their values. With ESG initiatives now a major factor prospective employees consider, implementing a program can give your company a critical edge in competing for talent.
MORE: Investing trends for Gen Z and what it means for financial services
Another compelling reason to implement ESG strategies is that they can help you land new business opportunities. When vetting whom to award their business to, many companies now look beyond the lowest price or the flashiest branding; they also consider how a company does business. According to Sustainability Magazine, 24 percent of mid-market business executives said there was a “high” risk of losing business, or the eligibility to bid for new business, if their company failed to meet acceptable ESG standards.
With more corporations factoring in ESG performance in their vendor selection process, having a program in place can help you qualify for new revenue opportunities.
Organizations lacking ESG are vulnerable to rising regulations with non-compliance fines. Hundreds of companies have already faced penalties for failing updated policies on issues like emissions, diversity, and governance transparency.
Implementing ESG helps ensure your company proactively meets evolving requirements, avoiding violations that incur substantial financial and reputational damage. It reduces compliance risks and liabilities.
MORE: Due diligence for third party environmental impacts
Hopefully, these proof points will help convince your executives that ESG programs will improve the world and your company if they are embedded in your media monitoring and overall PR strategy. And, if you need more support for your cause, download our new eBook: “The Ins and Outs of ESG: A Guide to Building a More Sustainable Organization” for everything you need to know about including ESG in your PR strategy.