“ESG Goals” may seem like a strange new buzzword, but it’s really just an acronym for a few key objectives that many companies have cared about for years. Here is what ESG stands for:
Setting ESG goals can benefit your organization in myriad ways, and they are particularly helpful for ethically-minded companies. A lot of companies that prioritize people and the planet, such as Certified B Corporations, often have ESG goals.
Identifying company goals for each of the ESG components can serve as a guide when navigating complex business decisions.
Let’s consider how the environmental component of ESG goals can inform decision making on something like product packaging. If the “E” of your ESG goals includes reducing plastic usage and combating deforestation, utilizing recycled paper products for packing material is an easy choice. If the focus is reducing pollution and climate impacts, installing solar panels to power your distribution facility or seeking out shipping companies that use electric vehicles is an excellent option.
Now that we’ve taken a look at how ESG goals impact day-to-day decisions, let’s look at the broader impact an ESG approach can have on businesses.
In recent years, consumer preferences have shifted dramatically when it comes to corporate responsibility–79% of consumers report changing their purchasing habits based on environmental impact, social responsibility, or inclusiveness. Among consumer product and retail companies who have adopted sustainability initiatives, 77% report that it has led to an increase in customer loyalty, and 63% report it has increased brand revenue.
Establishing ESG Goals is an excellent way to communicate to conscious consumers that your company is actively working to address the things that are important to them. By highlighting your company’s ESG goals, you can capture the growing market of consumers who want to patronize companies that practice environmental sustainability and share key values with them.
American workers are prioritizing alignment with their company’s values more than they ever have before. Approximately 6 in 10 workers who have changed jobs in the wake of the Covid-19 pandemic report doing so in an effort to work for an employer that better aligns with their personal values.
When it comes to attracting talent, organizations can no longer afford to ignore corporate responsibility, a major priority for today’s workers. 70% of US workers report that they would be more loyal to a company that is actively addressing social and environmental issues, and among Millennials (who will make up 75% of the workforce by 2025) 64% report they would turn down a job if the employer does not have a strong corporate social responsibility policy.
Pursuing ESG goals can also help with employee retention. A 2021 study of employee engagement found that even in the era of the “great resignation,” for employees who felt their company was making a strong positive impact in the world, 93% planned to stay in their current position. For employees who didn’t feel so positively about their company’s social impact, that number plunged to 50%.
Implementing meaningful ESG goals may also offer companies significant financial benefits over the long term. A long-range study from the Torrey Project shows that more ethical companies, particularly those that have developed a stakeholder-focused model like ESG, consistently outperform the S&P 500. Over the 20-year period from 1999 to 2019, the stakeholder-focused companies in the study generated 100% higher returns than the S&P 500, a common benchmark for overall stock market performance. The conclusion here is that in the long term, establishing and pursuing ESG goals may help to yield stronger financial returns, and the market will reward the long-range approach.
Financial institutions are also observing a rise in consumer demand for “sustainable funds” that offer socially conscious investment opportunities, often exclusively composed of companies that meet key ESG factors. Values-based investing is a growing trend that is here to stay, with 77% of millennials and 84% of Gen-Z reporting that they prioritize environmental, social, and governance concerns when evaluating investment opportunities.
Your business’s ESG goals can be the most impactful when integrated into all other company goals, serving to inform every important decision you make. As we’ve seen, businesses stand to benefit in a number of ways from thoughtful consideration of how their actions impact the three pillars of ESG.
If you are looking for meaningful ways to achieve your company’s ESG goals, reducing your carbon footprint with solar is a great way to do so. And by working with a Certified B Corp solar developer such as Pivot Energy, you can take pride in the fact that you are working with a company that shares your desire to do good for both people and the planet.
Contact Pivot Energy today.
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