Per this article on a Bain & Company and EcoVadis study of 100,000 companies, of which 80% are private, ESG activities (sustainability, diversity and employee satisfaction) correlate with stronger financial performance and growth for private companies:
- Companies with more women on the executive team have better financial results.Companies that rank in the top 25% of their industry for executive team gender diversity have annual revenue growth approximately 2 percentage points above that of companies in the bottom quartile. And their EBITDA profit margins are 3 percentage points higher than that same group.
- Renewable energy usage correlates with higher EBITDA margins in carbon-intensive industries. In the natural resources, transportation and industrial goods sectors, companies that use more renewable energy have higher EBITDA margins.
- Companies that focus on ethics, environmental and labor practices within their supply chains are more profitable. These companies have margins 3 to 4 percentage points above those that don’t focus on their suppliers’ ESG credentials.
- ESG leaders have higher employee satisfaction; companies with the most satisfied employees grow faster and are more profitable. They have three-year revenue growth up to 5 percentage points above those with less-satisfied employees and margins as much as 6 percentage points higher than those laggards. Beyond the basics of fair pay and ensuring a safe work environment, benefits may include career training, mental and physical healthcare, childcare, and educational opportunities, all of which boost employee satisfaction and, as a result, productivity and retention.
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