RESOURCE CENTER

The Business Case for ESG Strategy

How ESG Delivers Business Value

Discover seven ways ESG strategy delivers business value; then take action at your organization.

The demand for environmental, social, and governance (ESG) reporting has never been greater. Yet as organizations worldwide face increased pressure from growing ESG regulation and disclosure requirements, they still need to cut costs, reduce complexity, and find more efficient ways to do business. What you may not realize is that implementing an ESG strategy can have significant benefits for your organization — including cost savings, risk mitigation, expanded capital access and market value, and improved brand perception.

By proactively creating an ESG strategy, you can shift your business and operating model toward sustainable practices. Making sustainability a part of your corporate strategy will help future-proof your business model before ESG regulations require you to. This will set you on a path to ESG maturity, which can serve as an indicator for future business performance in capital market valuation and other areas.

In this report, we identify seven ways ESG strategy delivers measurable value to your organization. Then, we show you how to use this potential to create your strategy and take action.

What are ESG and ESG strategy?

ESG helps an organization maintain accountability to itself and its key stakeholders, such as investors, customers, and employees. ESG topics represent risks and opportunities that will afect a company’s ability to create long-term enterprise value. ESG reporting allows internal and external stakeholders to measure organizational performance and progress across ESG areas, including (but not limited to):

Environmental — encompasses such issues as climate change and greenhouse gas emissions, biodiversity loss, natural resource scarcity, water management, waste management, and energy usage.

Social — pertains to diversity, equity, inclusion, human rights, labor practices, supply chain management, political movements, culture, safety, training, product safety, and data security.

Governance — refers to how companies conduct their business, implement and uphold policies, compensate executives, hold management accountable, govern their boards, and publicly disclose company information.

An ESG strategy is a plan of action to achieve goals aligned to ESG initiatives and metrics. Every organization’s ESG strategy will look different, as it will align to the vision and values that specific business.

7 Ways ESG Strategy Delivers Value to Your Organization

Sustainable business practices increase efficiency, leading to reduced costs.

By being more efficient with water usage, reducing power consumption, choosing energy-efficient equipment, and switching to renewable energy resources, organizations make big strides for both the environment and their bottom line. Research from McKinsey found that executing ESG plans effectively can affect operating profits by as much as 60% by combating rising operating costs. In the same study, McKinsey found a significant correlation between resource efficiency and financial performance.