Historically many companies have treated ESG (environmental, social and governance) issues as important but tangential to the core business. More often than not, these issues were managed as secondary activities with an indirect connection to the core business and bottom line.
The market is undergoing a significant shift, with companies increasingly expected to address ESG issues head on. ESG is becoming a C-Suite issue and is expected to have a material impact on the bottom line. A recent Deloitte survey found two-thirds of global CFOs expect their role in ESG-related strategies to increase over the next two years. There are several factors driving this trend including loss of trust in business, stakeholder pressures, natural resource constraints, supply chain pressures, and social and mobile enablement.
Most companies would agree that the trend exists. Now the question becomes – what does this mean in practice? Can responsible enterprises create shareholder value?