KEY ESG TRENDS & INSIGHTS: WHAT BUSINESSES NEED TO KNOW

Summary: Today, other than profits, customer satisfaction, employee experience, and business disruptions, organizations are under pressure to develop sustainable products & services and conduct responsible social engagement. In the Environmental, Social, and Governance (ESG) path, organizations will continue to evolve their ESG and sustainability priorities. Increasingly, customers are choosing to spend their money aligning with their values. Most individuals, over 60%, are now making purchasing decisions based on ethical and sustainable considerations, a trend growing by 10% annually. Furthermore, they are willing to pay a premium for products that are made sustain-ably and ethically. In this article, Dr. Mythili kolluru, a prolific writer, Strategist, and Professor of international business, discusses her research on key trends to watch out for in any organization’s ESG journey.

Introduction

ESG stands for Environmental, Social, and Governance. It is a framework for evaluating the sustainability of an organization. The concept of ESG began in the 1960s when socially responsible investing (SRI) was practiced. SRI is a type of investment that excludes stocks of products engaging in business activities like tobacco products or involvement in the apartheid regime. In the 1990s, SRI evolved to include Environmental, Social, and Governance (ESG) factors. This approach became more holistic to investing as it considered the ESG performance of organizations when making investment decisions. James Gifford is the person to be credited with conceptualizing the concept of ESG in 2013. Grifford’s research paper on ESG was influential in bringing ESG to the business community. His research paper is the first academic work that linked ESG factors to financial performance and equity pricing. The concept of ESG is still evolving, and it’s becoming increasingly important. Investors are in search of organizations with ESG and sustainable practices. Customers are showing a keen interest in buying from companies that are committed to ESG practices. And other stakeholders like employees, suppliers, and communities also demand that organizations integrate ESG into their mainstream business.