Value
Adding Value Through Sustainability
Enhance your organisation’s reputation
Your brand, regardless of the sectors in which it operates, is measured by your customers. For example, a staggering 60% of U.S. consumers say brand values influence their purchasing decisions, and 64% are willing to pay more for a sustainable product.
Your customers are also influenced by all forms of media, and it surely makes better financial sense to not become a bad news story than to fight the near-impossible battle of salvaging a hard-earned reputation?
Success requires the constant reaffirmation that your reputation is not based solely on the environment or social components of ESG. Good governance is at the very heart of delivering meaningful and quantifiable change.
Your effectively executed ESG strategy will reveal itself first through new approaches to combat rising operating expenses. Fresh investment, targeted correctly, can boost operating profits by up to 60 percent just by concentrating on energy, raw materials, and carbon management. This, in turn, funds the investment required to fund ground-breaking initiatives which enhance the organisation’s reputation.
Supply chain risk mitigation is (profitable) good governance!
Apart from mitigating regulatory risk, good governance includes active management of your supply chain. Supplier analysis must be more than cursory meetings or emailed questionnaires: it should entail site audits where applicable, and an array of impact assessments.
What is the potential impact of a supply chain failure? What if a key supplier is revealed to be an exploitative employer? Good governance requires an understanding of the organisation’s supply chain far beyond capability to deliver and price.
Once supply chain governance is understood as the integration and coordination of operations, the proper policies may be implemented and controlled through intentional actions to affect partner relationships.
Effective management of ESG issues throughout the supply chain offers benefits because of the reduced risk of supply chain disruption due to ESG issues. For example, improved working conditions can decrease turnover and improve quality. Add to that the lowered compliance and regulatory risks due to a proactive stance on management of ESG risks overall. From there, such a sustainable supply chain then presents opportunities for innovation and market differentiation.
Supply chain auditing is a speciality of ESG PRO and is offered as a multi-tiered service scalable to meet the requirements of global corporations.
Deliver growth today, tomorrow, and in ten years
Sustainability management will reveal many hidden opportunities for cost reduction and efficiency gains, while spurring the innovation required for growth. A compelling ESG proposition enables businesses to enter new markets and grow within existing ones. Governmental bodies are more likely to grant corporates the access, approvals, and licences that open new growth opportunities when they have faith in them.
Your stakeholders agree too that it’s good to generate profits, but it must be remembered that they also want your organisation to address environmental and social issues. Contrary to what many people think, older groups of people are just as worried as the millennials and the later generations about these issues.
People want businesses to benefit people while operating sustainably and reducing their negative effects on the environment and society. Employees prefer to work for businesses whose values align with their own, and the evidence that investors believe that sustainable businesses are more valuable is overwhelming.
The result of a cohesive, holistic, approach to ESG strategy is that it adds value, and the challenge is to recognise that the measurement of that value is often complex because it doesn’t reflect immediately in the balance sheet.
Access the capital you require for growth
As of the end of 2021, $37.8 trillion had been invested in sustainability funds and portfolios around the world. By 2025, this number could rise to more than $53 trillion.
The ramifications of access to “green capital” are significant. At the lower end, getting venture capital is highly competitive, and a well-thought approach to ESG is helpful. At the company level, ESG performance improves the chances of getting more funding or getting more money when the company is sold, bought out by private equity, or goes public. When it comes to an exit by initial public offering (IPO), stock exchanges and listing authorities are becoming more likely to ask for stricter ESG disclosure.
According to a PwC survey of investment professionals, ESG risks are a big part of their investment decisions for 80% of them, and nearly half of them would sell their shares in a company they thought wasn’t living up to its ESG promises. Sustainability funds are putting their money into companies that are good for the environment, society, and the economy (ESG).
1 MSCI, “Three Major Channels from ESG to Financial Value”, citing Chava 2011 20+ studies, both academic and industry, and Deutsche Bank 2012, et al.
2 Gunnar Friede et al., “ESG and Financial Performance”, Journal of Sustainable Finance and Investment, October 201, volume 5, number 4, pp. 210 – 233.
3 Gartner, “The ESG Imperative: 7 Factors for Finance Leaders to Consider”, June 10, 2021.
4 BDO United States, “The Sustainability Edge: Business Benefits of Embracing ESG”, citing 2021 survey conducted by the Chapman & Co. Leadership Institute.
