Environmental, Social and Governance (ESG) performance may be key to your company’s success. This may seem odd given the current political climate that is moving away from the government commitment to promoting ESG programs. The fact is that the movement by shareholders to promote ESG started before the current change in Washington leadership and is continuing.
The importance of ESG is shown through:
- Customers who want to support a business that is doing “good” or at least not doing harm
- Investors who want to be associated with an organization that demonstrates ESG responsibility
- Employees who will voluntarily contribute more of themselves by being part of a purpose-driven organization
The investment community has demonstrated this:
- Investment firms such as Vanguard and BlackRock have made statements about their commitment to ESG in selecting companies for their investment portfolio.
- Per Larry D. Fink, Chairman and CEO of BlackRock: “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. “
“The fact is that the movement by shareholders to promote ESG started before the current change in Washington leadership and is continuing.”
- Vanguard is now a signatory to the Principles for Responsible Investment (PRI). Founded in 2005, the PRI is a United Nations-supported network that encourages asset managers and other institutional investors to engage with corporations on ESG issues to create a more sustainable global financial system and support long-term investment value.
- Investment advisory firms such as Institutional Shareholder Services (ISS) and Glass Lewis now have an ESG evaluation section as part of their reports that recommend a ”For“ or “Against“ vote on proxy issues presented to shareholders.
- Companies are now encouraged to start a dialogue with their major shareholders about their ESG activities throughout the year.
Further, in this day of social media, a company or organization of any size can suffer quick and sometime irreparable damage through a claim of sexual harassment, environmental damage, or lack of good governance
practices. On the positive side, the social media platform can provide a reason for someone to go out of their way to do business with you or want to be employed by your organization.
An inspiring example of a successful start-up venture with a social purpose is John’s Crazy Socks — johnscrazysocks.com — a father-son venture inspired by co-founder John Lee Cronin, a young man with Down syndrome. Their mission: we want to spread happiness.
You will find ESG sections on many corporate web sites. Good Advice: Add ESG as a marketing element for your business success and as an important component to rewarding your employees for their work. Please let us know if we can assist. stb