- Insider surveyed 614 business decision makers in 7 countries about innovation investments, ESG, and goals.
- A majority of respondents indicated that their companies had ESG policies as well as specific objectives.
- Companies learn to measure ESG performance, while investors seek consistent and reliable data and analysis.
- Visit the Insider’s Transforming Business home page for more stories.
Companies are increasingly setting environmental, social and governance (ESG) goals, as systems for measuring the impact of ESG initiatives evolve to respond to the moment.
Momentum could be a driver of new areas of business transformation, especially if businesses focus on Diversity, Equity and Inclusion (DCI) outcomes.
The increased focus on ESG is inescapable. During a Transforming Business roundtable in December, Insider asked the panel about a reported increase in demand for ESG investments, fueled at least in part by the pandemic.
“Millennials are value investors – and they get older and they get richer,” said Edward Lees, senior portfolio manager at BNP Paribas Asset Management, and a 2020 Transformer. “So this whole demographic of emerging, value-driven, climate-conscious people are joined at the same time in an explosion of democratizing investment products where you can go on your cell phone and pick a theme and press. on a button. “
However, the focus on ESG goes beyond millennial individual investors, as fund managers and institutional investors are under increasing pressure to include ESG offerings for their clients and complement their own participations.
A recent Transforming Business * survey of 614 business decision makers showed that 60% of people in their business had set formal ESG goals. Greenhouse gas emissions exceeded targets, followed by water consumption and carbon offsets. Equity and social justice, as well as diversity and inclusion, were also top priorities.
Measure and Responsibility
The pressure is on to quantify ESG investments and results, including at the level of the US government where the newly confirmed chairman of the SEC, Gary Gensler, is expected to focus on ESG reporting. President Joe Biden’s Climate Leaders Summit solidified this administration’s commitment to tackle global warming.
In February, Allison Herren Lee, then interim president of the SEC, released a declaration signaling the increased concentration of the administration on these initiatives. “More than ever, investors are taking climate issues into account when making their investment decisions,” she reads in her press release. “It is our responsibility to ensure that they have access to important information when planning for their financial future.”
In September, the World Economic Forum (WEF) and the International Business Council (IBC) partnered with leading accounting firms to create the reporting framework for 21 ESG standards, and more than 60 companies agreed to adopt it.
The greater the corporate responsibility, the greater the potential rewards, as investor appetite for these products increases. “The truth is, being an ESG leader doesn’t guarantee your financial and business success,” says Martin Whittaker, CEO of JUST Capital. “It’s much more complicated than that. You need to be able to assess what companies are actually doing on environmental, social and governance issues, how this really relates to the short-term accounting and financial performance of the company, and how then I use it as an investor?
ESG, DEI and business transformation
As companies strive to implement ESG goals and operations, advancements in these areas can lead to new levels of business transformation. Diversity, equity and inclusion (DCI), which are the main tenants of the “social” part of the ESG framework, is a crucial factor in driving products and programs that fuel innovation.
“The innovation process as it takes place within companies and the beneficiaries of the innovation, i.e. the customer, are all wrapped up in the ‘S’ of ESG,” said Whittaker. “Knowing your customer, knowing your supply chain, what your customer wants and how you meet those needs – all of this requires a diversity of perspectives and experiences, and forces companies to rethink the way they do it. “
“Your progress towards innovation could be stifled if you don’t pursue a DCI strategy,” he said.
* According to the Audience panel, this SurveyMonkey Audience survey targeted people who work in a management capacity in their company. They included respondents from Hong Kong (n = 50), Singapore (n = 50), United States (n = 207), Canada (n = 104), France (n = 52), UK Uni (n = 51), Germany (n = 50) and India (n = 50), with local translations in Germany and France. Respondents are encouraged to complete surveys through charitable contributions. Generally speaking, digital surveys tend to lean towards people with Internet access. SurveyMonkey Audience does not attempt to weight its sample based on race or income. Survey data collected a total of 614 respondents from March 3-4, 2021.