Environmental, social, and governance (ESG) and sustainability have emerged as top priorities for businesses and consumers in 2022. In a 2021 survey by PwC, 76% of consumers responded they will stop buying from companies that “treat the environment, employees, or the community in which they operate poorly.”
For companies that underscore investments in ESG, the benefits are clear. An article published by Forbes states that supporting social and environmental issues makes 92% of Americans more likely to trust a business. Meanwhile, the article also states employee churn decreases by 25%–55% for companies with dynamic ESG programs, while stock returns rise by 5%–10%.
Businesses worldwide have deepened their commitment to diversity, inclusion, and equity. Over the last two years, many companies have doubled their responsibilities to support equity and inclusion in technology.
ESG and sustainability efforts are critical in meeting compliance and business growth targets, attracting talent, and reducing costs. Younger generations want to work with and for businesses that are committed to sustainability, social responsibility, and better governance models. A survey by The Harris Poll with CNBC Make It found that 33% of millennials exclusively invest in companies with solid ESG programs, compared to only 2% of baby boomer investors.
These initiatives can have far-reaching benefits as businesses work to find better ways of quantifying those outcomes. An even greater focus is on measuring sustainability efforts. With new net-zero targets set at the UN Climate Change Conference in Glasgow (COP26), sustainability has emerged as a substantial driving force for organizations in 2022. At the same time, enterprises face increasingly complex systems, supply chains, and a lack of skills and resources to accelerate digital transformation.
In addition to net-zero targets, regulatory and governance factors require businesses to reduce their impact on the environment. As the world prioritizes ESG, regulatory changes will soon mandate companies to report ESG issues. Meanwhile, many countries have released climate-related financial risks and opportunities.
Achieving ESG and sustainability takes a significant commitment, with investments totaling in the trillions by 2050. Technology, such as using AI/ML to monitor and predict carbon emissions, is a critical component that businesses will continue investing in. When done right, the key benefits of having a sound ESG strategy include top-line growth, cost reductions, regulatory and legal interventions, and investment and asset optimization.