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Why ESG and CSR are Here to Stay

Why ESG and CSR are Here to Stay

Author: Carmen Adamson

The world is facing unprecedented challenges connected with environmental issues pertaining to climate change, clean water, ocean health and biodiversity.² Companies need to adapt their strategies to account for these environmental challenges or they won’t be set tup for long-term sustainable growth. As ecological concerns gain prominence and consumers become increasingly aware of the potential environmental implications of their purchases, consumers will look for products and brands that promote Environmental Social Governance (ESG). Consumers and employees are also attune to a corporations response and support of social justice and how they care for their employees, customers, and communities.

3 Reasons Why You Should Invest in Corporate Social Responsibility (CSR) Including ESG

Global Pressures –

As countries around the world face environmental challenges, your business will feel the pressure to meet the standards of doing business sustainably. In 2015 governments from around the world came together and agreed on the Sustainable Development Goals or SDGs. The multi-year strategy of the UN Global Compact is to drive business awareness and action in support of achieving the SDG’s by 2030.1 Today if you visit the UN Global Compact website you will see over 13,000 companies from 160 countries that have joined this commitment to align business strategy and operations with universal principles for human rights, labor, environment and anti-corruption.

On April 23, 2021, Hawaiian legislatures adopted a bill that declares a climate emergency. Hawaii is the first state to declare a climate emergency and the bill “acknowledges that an existential climate emergency threatens humanity and the natural world, declares a climate emergency, and requests statewide collaboration toward an immediate just transition and emergency mobilization effort to restore a safe climate.” Internationally, the number of governments that have passed similar resolutions is close to 2,000 and includes the parliaments of many prominent nations like Ireland, Italy, the United Kingdom, Portugal, Spain and Vatican City.²

Reputation–

Don’t just check the box! Companies have already noticed consumers’ desire to purchase products that are environmentally friendly. The development of green advertising has become an important component of brand messaging3, but you can’t just talk the talk. In the Journal of Advertising article “Misleading Consumers with Green Advertising? An Affect–Reason–Involvement Account of Greenwashing” researchers studied two types of claims found in greenwashing, vague claims and false claims. The researchers found that false claims bring harm to the brand, but even the perception of greenwashing associates negative attitudes with those brands.³

Additionally, the 2019 Gen Z Purpose Study showed that 9 out of 10 say if a company makes a commitment, it should have the appropriate programs and policies in place to back up that commitment. This generation won’t take companies at their word alone. 75% will do the research to see if a company is walking the talk when it takes a stand on an issue.⁴

Companies need to invest in ways to measure and report on how they are meeting ESG goals. Companies that don’t uphold their reputation could lose investors, partners and customers.

Investors and consumers look for companies with CSR and ESG programs –

New data shows that the most valuable market in the world, families with young children, demands environmental responsibility and action towards climate change. Passion Points data from Q1 2021 shows US parents raising children today spike 400% on their concern for global warming and climate change.⁵

As Gen Z enters the workforce with strong purchasing power, they are shaping strong opinions of the world around them.⁴ This includes paying attention to how companies participate in making a change towards addressing social and environmental issues. 94% believe we need to come together to make progress towards important issues.⁴ If your company is not participating in social responsibility not only will they likely not purchase from you, but they also won’t want to work for you.

From the investor point of view you can see in the news that Blackrock issued a $7 trillion climate change warning to the stock markets. Blackrock is known as the world’s largest investor and the fund manager’s plan indicates a significant change and impacts how the investment community views action towards ESG. Ceres, a sustainability nonprofit that works with investors on climate change, announced a consortium of investors managing $9 trillion in assets that have committed to investing along with net zero carbon goals.⁶

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