Brands are always looking for the next best way to reach consumers and keep up with the times. Social media marketing can help, but creating an environmental, social and governance (ESG) strategy is most effective.
ESG not only helps businesses by attracting a more diverse workforce to bring in new ideas, but it also helps businesses have a greater positive impact on our world. Here’s why it’s essential for the future of business.
1. People Want to Battle Climate Change
The threats presented by global warming affect everyone, and companies with an ESG focus align themselves with the needs of their consumer base. The first part of the acronym covers environmental efforts to reduce a brand’s carbon footprint and improve the environment.
Given that 64% of people globally believe climate change is an immediate emergency, they’ll look to support brands recognizing the issue and seeking solutions. Companies that reject this reality will alienate themselves from consumers who don’t want their purchases to contribute to environmental waste.
2. Shoppers Want Businesses With Shared Values
According to the most recent Global Trends report from the World Economic Forum, 70% of worldwide consumers want to support companies that align with their values. Fighting climate change and promoting equality were two of the top issues respondents noted in the study. ESG strategies would cover both of those topics and more. Corporations will continue becoming more focused on this as the future of business rewards ESG companies.
A greater focus on ESG will also make retaining ESG talent more important than ever. This will require a greater focus on impact employees can make on the world. Employees, particularly sustainability professionals, want to know they are helping issues that matter to them.
3. Tax Benefits Await Positive Corporate Changes
Corporations may prioritize strategic moves that align with their shareholders’ needs, but they can also improve their professional futures by going green. Expanding consumers bases isn’t the only way brands can boost profits by meeting ESG goals. They’ll also enjoy numerous tax benefits by going green, like grants for 30% alternative energy use and credits for hybrid or electric company vehicles.
Additionally, one of the most significant tax benefits available for businesses is one few take advantage of. Donations for conservation easements can be counted as a charitable deduction, which can have a huge impact on businesses moving toward greater sustainability in their facility.
4. Supply Chains Become More Effective
Improving a company’s corporate social responsibility (CSR) also benefits its supply chain. Brands have to identify their most significant sources of waste to decrease their energy consumption and reduce their environmental impact. Streamlining production processes and minimizing materials needed to maintain production will ensure greater output, boosted profits and smaller carbon footprints.
Businesses can also make an impact on the shipping industry. More businesses moving toward sustainable shipping and electric fleets could spur an overall shift in the industry.
More transparency with consumers will help them support sustainable companies, especially with the rise of greenwashing as a tactic to attract consumers. However, showing the real impact businesses can have on the planet will make more sustainable choices possible for consumers.
5. Consumers Look for Diverse Leadership
ESG also includes the need for governance improvement. This includes reflecting on who works for a company and what the leadership teams look like. Corporations take on that challenge by improving their gender equity and diversity among board members and other leadership positions.
People that see long-term positive changes will switch their brand loyalty to companies that make this factor part of their ESG strategies. Meeting consumers’ needs is a top priority for businesses, and no one can ignore the fact that 61% of Americans want more diversity from the brands they support.
6. Employees Stay Long Term With ESG Companies
Retaining employees used to require focusing on providing health care benefits and increasing annual wages. Now people are equally, if not more, concerned with working for companies that align with their values.
The COVID-19 pandemic changed how people view their employers and where they commit their professional time. A survey conducted by the Edelman Trust in 2021 found that six out of 10 respondents picked new jobs based on the company’s values.
Brands that strive for positive change regarding environmental, social and governmental strategies will watch their retention rates climb because their efforts match what their employees care about most.
Learn More About ESG
There are many reasons why ESG is important for the future of business, and every brand should consider the different factors that make it a successful strategy. Listening to consumers and employees before acting on those needs will result in long-term professional success because companies will change with the times.