Written by Peter Chiswick, Director of Corporate, Remarkable Partnerships.
“ESG is not only the right thing to do, it’s also a source of competitive advantage and value creation for our customers and shareholders”. Jensen Huang, the CEO of Nvidia
The economic landscape has changed, and so have the expectations and demands on companies. In this challenging climate, high performing companies have responded by embracing the opportunities possible from Environment, Social and Governance (ESG).
We believe ESG is an enormous opportunity not just for companies but also charities.
ESG increases performance
In today’s competitive business environment, high performing companies understand the strong connection between ESG performance and financial performance.
ESG can help companies create positive social and environmental impact, enhance brand, improve employee engagement, increase customer loyalty, and differentiate themselves from competitors. A great example is the technology company Nvidia whose foundation was set up as key ESG initiative to empower its employees to support various causes and initiatives, such as advancing cancer research and promoting STEM education. Nvidia’s profits have achieved record growth of 61% versus 2021.
With companies now using ESG to achieve impact and performance, charities have a great opportunity to demonstrate how achieving their ESG goals can be directly linked to them.
ESG is measurable
ESG is able to help companies benchmark their ESG performance against their peers and industry standards, and to identify areas for improvement. By using ESG framework, they are able to understand the impact of ESG activities on society and the environment.
Unilever has successfully used ESG to benchmark and improve its sustainability performance, and to create value for its stakeholders. Unilever uses ESG to align its purpose, and business strategy with the United Nations Sustainable Development Goals and the Paris Agreement on climate change. They have been ranked the most sustainable company in the consumer goods sector by the Dow Jones Sustainability Index for ten consecutive years.
This represents a great opportunity for charities to use their knowledge and expertise by providing credible metrics, benchmarks, and guidance to help measure their ESG performance.
ESG reduces risk
ESG is not only a matter of values, but also a matter of risk management.
Patagonia the clothing company is a great example of how ESG can reduce risk for a company by not only protecting its business from potential threats and challenges, but also enhance its reputation and brand loyalty among consumers and investors, who value its environmental and social impact.
Partnering with a number of charities including Friends of Earth, they support organisations that work on issues such as climate, biodiversity, land, water and environmental justice, and that have a clear strategy and a strong base of support from all of its stakeholders.
This is great news for charities, because it reduces the risk of partnering with companies who can demonstrate they are committed to best practices of environmental, social, and governance standards.
ESG is in the boardroom
The ESG agenda is evolving in the boardroom, with a focus on recruiting passionate leaders who can use ESG to create a vision that is purposeful, inspiring and impactful.
A great example of this is Microsoft’s’, CEO, Satya Nadella, who transformed the company’s culture by using ESG to align their vision, values, and set ambitious goals. These include investing $1 billion in a climate innovation fund, becoming carbon negative by 2030, and launching a global skills initiative to help 25 million people worldwide through diversity and inclusion programs.
Ranked first on the list of the 100 Best ESG Companies of 2021, Satya Nadella, CEO of Microsoft said, “ESG is not a cost, it’s an investment. It’s an investment in our future, our planet and our people.” .
At the forefront of addressing the most pressing ESG issues and challenges in the world, charities have a great opportunity to provide valuable knowledge and guidance to help leaders transform their companies.
ESG allows businesses and society to collaborate, to address global and local challenges that affect them both. By uniting various stakeholders, such as NGOs, and communities they unite to achieve transformational impact through a clear shared purpose.
A great example of this is Starbucks who use ESG to guide its actions and decisions and to unite their stakeholders around their purpose, “To inspire and nurture the human spirit – one person, one cup, and one neighbourhood at a time”. By covering three areas: planet, people, and social impact Starbucks promotes a culture of diversity and inclusion among its partners, and provides them with the support to create a more sustainable future for coffee.
Charities have a great opportunity to become an effective promotor for a company’s vision and goals, to inspire their shareholders to unite and demonstrate their commitment to making a positive impact.
ESG is an enormous opportunity. It’s vital that both companies and charities seize this moment to partner through ESG goals, by sharing their expertise, resources, and values to change our world.