This article in the New York Post reports on this study and is consistent with other studies we have reported.  Key points

• Almost two-thirds of respondents stated they were more likely to apply to a job for a company that committed to sustainable practices.
• Three out of five respondents said they avoid employers they perceive as having a negative impact on the environment.
• 54% of respondents said that sustainability played a role in their motivation to work remotely.

Simple math – If you are looking to hire and 60% of the possible candidates will avoid you if they perceive your company is a negative impact on the environment, your hiring effort will be negatively impacted.

Sure, you can mask it.  But once they learn the truth, and they quit, the cost to you will be greater than had they not taken the position in the first place.

The Under 40 worker wants to work for a company that can prove it cares about the environment.  The Under 26 worker has an even higher expectation of same.

Those are the workers that are the future of your company.

The following are a few points from a new United Nations Global Compact-Accenture study on CEOs.  At the bottom is how this will effect you.

• 98% of CEOs believe it is their role to make their company sustainable (up from 83% in 2013)
• 75% of CEOs are launching sustainable products/services
• 72% of CEOs believe they are personally accountable for their company’s sustainability performance (up from 19% in 2013)
• 68% of CEOs say their customers are demanding they become sustainable – “Competition used to be based on cost of performance. Now a key attribute consumers are looking for is sustainability”
• 56% of CEOs are introducing new sustainability models
• 55% are lowering greenhouse gas emissions (this will impact you, as a vendor)
• 52% of CEOs believe government regulations are influencing their sustainability decisions (up from 31% last year)
• 34% are already reducing their Scope 3 emissions (this means you, as a vendor)
• 33% are already conducting value-chain assessments (this means you, as a vendor)
• 33% are already incentivizing ESG outcomes for their value chain (this means you, as a vendor)
• “Sustainability is the most significant business imperative of our time”
• “A sustainable business is a profitable business”
• “Sustainability is no longer a cost of doing business; it is a catalyst for innovation, growth, new market opportunity and wealth creation”
• “For the last 3 years, 60-70% of my conversations with shareholders pertain to ESG”
• “Valuation is no longer based just on earnings or growth anymore. The other big part of the valuation is based on sustainability, leadership, culture and the values you represent”

What does this mean for you?

• CEOs are now driving the transition to sustainability, so all departments will have sustainability as part of their goals/objectives
• Expect Scope 3 emission reduction demands to jump dramatically (ie, expect a call from your client)
• Expect value-chain reviews to jump dramatically (ie, expect a call from your client)
• Expect Procurement offices to more aggressively replace vendors with sustainable options (ie, expect a call from your client)

This article in Education Times suggests that whether companies look at consumer engagement, risk management, or profitability, it is clear, ESG is the future of business.

A few of the key points

• Per a PWC study, 83% of consumers want your company to have an ESG program
• Per the same PWC study, 86% of job seekers want to work for an ESG company
• Per Morgan Stanley, companies with strong ESG programs perform better
• In 2022, Impact Investing reached $1.164 trillion

As we have stated in prior blogs, we do not recommend your company go straight to an ESG program.  It is easier for your company to add one thing, rather than three.  We strongly suggest you start with becoming environmentally certified sustainable (the ‘E’ in ESG).  Once you are happy with that, progress to becoming certified carbon neutral.  ESG comes next; followed by becoming certified net zero.

This PPP gives advice on what kind of program you might want to consider.

There has been a lot of talk and confusion around ESG over the past year.

Let’s explain some of the confusion.

Sustainability is the ‘E’ in ESG.  It is doing fine.

When a company expands its internal policies to include systems, documentation and disclosure to improve on the ‘S’ (ie, Social) and the ‘G’ (Governance), good things also happen.  So, this is also fine.

The problem occurs when financial markets, looking to capitalize on the excitement over the movement, create and market ‘ESG funds’ and fill those funds with organizations before proper standards are created for vetting. 

The issue is not whether ESG is beneficial at the operating level; but that the financial markets, looking to capitalize, created products they did not understand; and without standards to guide them. 

In this WSJ article, Bank of America Chief Executive Brian Moynihan responded to criticism of ESG.

Speaking on a panel in Davos, Mr. Moynihan was asked whether businesses like his would abandon ESG goals in the face of criticism from Republican leaders in the U.S., who recently gained control of the House. Critics have said companies should be more focused on profits and that ESG uses loosely defined, PR-friendly terms.

He was asked what if, for example, Republicans win the White House in 2024: Would companies like Bank of America alter course on ESG?

“No, because our company has been around for almost 240 years,” Mr. Moynihan said.

He added that CEOs view ESG goals such as combating climate change and making their workforce more diverse as integral to the long-term health of their companies. “They’re going to run the companies based on a view of how to create long-term value and I don’t think that gets derailed” by politics, he said.

Mr. Moynihan said universal reporting standards will pressure big companies and their suppliers to commit to goals that help society while also boosting profits.

“This annualized disclosure has to show year-by-year progress,” he said. “It now binds the company … By having it disclosed on a periodic basis and [making] it part of the official record, so to speak, you can’t walk away from it.”

The G-SIB are 30 global banks whose failure poses disproportionate risks to the global economy and whose assets represent nearly 63% of global banking assets as of year-end 2021.  The list is shown on Table A1 of the attached Board of Governors of the US Federal Reserve report that discusses what these banks are doing about climate change.

In short

• Most have committed to fully offsetting their emissions by mid-century – Therefore, they have made the commitment
• They are only beginning to measure financed emissions due to their loans and investments, which are the vast majority of their emissions – So, their downstream requirements will increase
• They have committed to increase green financing and are doing so – Sustainable / carbon neutral / net zero companies will benefit from this
• They are short of time – Programs will be accelerated

Why are the G-SIB members engaged in climate issues?

• The climate landscape is rapidly evolving via new regulations, enhanced societal preferences and technology advances
• This shifting landscape will create winners and losers
• The G-SIB members are therefore assessing risk and opportunity associated with climate change

Likewise, climate regulations are increasing all over the world

• The Task Force on Climate-Related Disclosures now has 859 financial firms, including all G-SIBs, totaling $175t
• Governments are imposing stricter emissions standards
• The UK now requires its large companies to report their climate risks and opportunities
• The EU has its new emissions laws
• Japan has its new emissions laws
• The US SEC is preparing to publish its new laws
• Major governments are assessing climate risk via stress tests
• It is predicted that by the end of this year, the majority of the world’s economies will have climate/sustainability components in their monetary policies

What does all this mean for you?

• This is moving very fast
• As the governments and G-SIB members squeeze down, the influence of climate and sustainability increases on the cost of money
• This cost of money influence can be managed by vendor selection (as you are part of their Scope 3 emissions)
• This will accelerate vendors being replaced by sustainable companies
• This brings us back to the G-SIB review of the shifting landscape that will determine winners and losers
• Given that they have already committed to net zero, and the effort to achieve same, and assessed the risks of not pursuing same, their tolerance for downstream users of their funds that are not equally committed will likely be small

Per this BizCommunity article, below are the four trends that will influence SMEs in 2023.

We then add our comments to each.

• Women-led ventures breaking barriers

• ESG and social entrepreneurship

• The fourth industrial revolution

• Storytelling for SME incubators and support programs

Besides being one of the four, as you would suspect, we see sustainability being an anchor of the other three.

For women led-ventures, or any smaller company that is new to a sector and short of cash, becoming certified sustainable is a wonderful way to cost-effectively take consumers away from established competitors, as 7 out of 10 consumers will move their business to a certified sustainable company.

As to the fourth industrial revolution bringing a new era of innovation in technology, sustainability is a core component for any company looking to cost-effectively scale any aspect of its operation.  From the use of alternative energy, to hybrid work environments, to less travel, to faster software, to reusable equipment, to hiring/retaining better talent, any organization looking to advance and scale with new technology needs sustainability as an anchor.

Finally, as to storytelling for SMEs, given that 9 out of 10 consumers want your company to be certified sustainable and 7 out of 10 will move their business to a certified sustainable company, there are few stories that will generate more impact for a company than to talk about becoming certified sustainable and being able to continue talking about your ongoing Green Team sustainability projects.

Per the study in this report, if you have a startup or scale-up and your organization is aligned with the UN’s SDGs (Sustainability Development Goals):

• You are less likely to fail
• Funding for SDG-relevant startups has doubled in just the past two years
• You are more likely to raise a Series A round of funding
• You will raise 2-3x the funds of your non-sustainable peers

Net, it is never too early to become certified sustainable.  Further, if you select the right team to help you with the SDGs, as discussed here, and select the right program, as discussed here, it will help you develop your team and help you cost-effectively differentiate your new company from your more established competitive peers.

Per this article in Entrepreneur Magazine

• Customers support brands that prove they have sustainability and environmental beliefs.
• Investment groups are supporting sustainable companies.
• Employees want to be happy, engaged and productive and purpose-driven companies help them achieve these goals.

They go on to say, you don’t have to sacrifice sustainability for profitability or visa-versa.  You can have both at the same time. 

Here are three suggestions they make; and we agree with all three:

• Talk more about your sustainability initiatives in your market effort – With the caveat that you are certified sustainable and not greenwashing, we completely agree with this. As we have reported, consumers want to move their business to certified sustainable companies.  When you talk about your sustainability programs, good things happen internally and externally.  Given that we are ranked as the world’s top sustainable voice/influencer, and we help our clients promote their sustainability certification, the actual marketing value we bring to clients, beyond the certification value, is 3x (within the first few months) – 9x (over the life of the ads) the cost of the certification.  In other words, the ROI for our clients, just in marketing, is 3x – 9x the cost of the entire certification. 
• Make clear that you are not sacrificing sustainability for profit or profit for sustainability – Again, we agree. Speak to the fact that you intend to be certified sustainable and make more money.  In point of fact, certified sustainable companies make more money than their non-certified peers, so be assertive that you can walk and chew gum at the same time by being able to make more money while also helping the environment and your community.
• Hire experts that can guide/advise/assist with the effort and align with your goals – Again, we agree. You don’t have to be a sustainability expert.  Bring in advisors who not only understand sustainability, but also understand how to marry sustainability and profitability.  

If you are thinking about how to do the above and what to do next, we recommend reading this PPP.  If you follow the 8 elements of a good sustainability program you will be happy.