There are many reasons to deploy an ESG strategy, including supporting business growth and talent retention.
B2B companies are facing increased pressure from investors, regulators and customers to start—or improve—reporting on environmental, social and governance (ESG) matters.
Climate change, employee health and safety, racial justice—companies today are facing these important issues and more. All of these relate to how the company is managing material risks to the business, business impact on the environment, employees, and communities, and integrating these factors into business planning for the long term.
In response, investors and other stakeholders say they need more information around companies’ ESG practices to fully understand the risks companies face. So much so that it’s caught the attention of the SEC and the G7, both of which are considering steps toward required disclosure about risks from climate change.
There are many reasons why B2B companies should take action when it comes to ESG reporting.
ESG strategy is better for your business
While B2B companies may not directly answer consumer calls for sustainable products, the companies they sell to are. The supply chain is all interconnected. B2C companies are feeling growing pressure from their own customers and retailers. They’re looking at the entire supply chain and asking suppliers to report on their own companies’ sustainability efforts.
Sustainability reporting also provides an opportunity to support business growth. One way is by pointing out areas of inefficiency that can be corrected to reduce costs. Another is bringing in additional revenue streams. For example, better waste management practices can open the door to driving down costs and discovering new uses that enable a company to sell and gain profit from waste byproducts.
ESG strategy is better for your investor relations
Most investors recognize that ESG risks can have a material financial impact. Rating agencies such as ISS ESG, MSCI, Sustainalytics and others review the performance and business portfolios of publicly listed companies and flag issues that present a risk from an ESG standpoint. Climate change can affect both your facilities and supply chains. Poor employee safety measures can result in lost time and lower productivity. A portfolio of products associated with human health or environmental risks can be seen as a liability.
Developing a sound ESG strategy, and reporting on progress against it, can improve investor confidence in your company, and even become part of your competitive differentiator.
Many asset management companies are starting to demand ESG performance reporting from the companies in which they invest—and giving only a short window of time for companies to comply. You don’t want to be caught flat footed in those instances.
ESG strategy is better for your talent retention
As workforce demographics shift, many employees are looking for companies with values. Millennials and Gen Zs now make up 46% of the U.S. workforce and their expectations for employers are value-driven. Deloitte found that nearly half of millennials and Gen Zs have made decisions about the type of organizations they will work for based on their personal ethics. But at the same time, 60% fear business leaders are not currently focused on protecting the environment. Without a strong commitment to the environment, organizations may be at a tipping point when it comes to hiring and retaining the best talent.
The reality is, it’s no longer just consumer-facing companies that need to make sustainability a priority. The focus has shifted and put a spotlight on the entire value chain. Ultimately company leaders need to show customers, investors, suppliers, and employees that they are doing everything they can to be the best they can be—for people, the planet and for the long-term success of the company.
Building your ESG strategy doesn’t have to be complicated. Whether it’s time to audit your existing sustainability reporting or determine where to start, Standing Partnership can help by:
- Performing an industry and peer assessment to examine the trends in your industry and pinpoint potential areas of opportunity.
- Evaluating the data already available. Many companies are already collecting some of the critical information for reporting—we’ll help you take the next step by collecting and compiling what you already have and identify the gaps.
- Advising on how to organize a sustainability report based on the frameworks your stakeholders have come to expect.
If you’d like to talk to one of our ESG experts, let us know at firstname.lastname@example.org.