The focus on Environment Social Governance parameters or ESG has picked up momentum in the last few years. This is because companies have been under tremendous pressure from people worldwide to account for their business’s social and environmental impact.
We have reached a tipping point with global investors demanding action and that this action not just be local or limited. They want transformation at scale because nothing else will do in the current state of climate emergency. So a compliance-driven approach where you submit a sustainability report is passé.
ESG represents about one-quarter of all professionally managed assets around the world. This leads to greater interest in robust ESG reporting along dimensions such as carbon intensity, risk exposure, and overall ESG profile.
In the Responsible Business Rankings report of Futurescape, companies perform fairly evenly across environmental and governance parameters. However, when we map the ESG parameters against the targets set in the Sustainable Development Goals (SDGs), much remains to be done across almost all parameters.
While ESG is another way of looking at corporate performance, corporate leaders need to ask themselves some crucial questions. The real one being, what are the steps that need to be taken to bring about genuine change so that people begin to trust them again?
Brands have been increasingly embracing causes. This trend is driven by the need to address many important issues surrounding the consumers who expect brands to positively contribute to society. This, however, has two critical implications.
Building a brand is far more than just advertising; hence, customers may not readily trust it, while a brand may associate itself with a cause. Therefore brands need to understand the values they stand for and make long term commitments to how they will do business. The SDG’s provide a framework that helps brands align with global causes and measure the impact of their work. Brand affinity has a higher life, and it is not just functional. Genuine change needs to be part of the brand ambition, as brands will only prosper if society prospers.
Businesses need to make a lifetime commitment to causes and a better way of functioning because business responsibility is neither just a brand strategy nor a product strategy. It’s really about how the company does business over the long term.
Defining a common agenda for the brand and its stakeholders helps narrow down the areas of focus. It is an obligation, a belief in a better way, a positive contribution to society in a different world. This belief helps brands deliver on their promises not just for the quarterly numbers but also for the long term.