DEBUNKING THE Brand Myths
Environmental, Social and Governance (ESG), is a rather ambiguous term, and it seems as though everyone is talking about it, like a new episode of teenage fever.
Everyone wants to know about it, examining how to do it and why they should or shouldn’t be doing it. Is it peer pressure, is it the right time, do they look right, are they doing it right, should feelings be involved or not and finally is it worth it?
Recently it seems to be the evolution of Corporate Social Responsibilities, with the barricade of binding together Environmental, Social, Governance in hope that the average person can decipher that it’s got something to with the environment, it’s something to do with everything around us (social), it’s about people and governance -and finally it must be about how companies are run.
All, in all, to make the world a better place. So simply, it’s about how companies interact with people and what’s around them, quite simply it’s about how we’re making a transition to a more sustainable form of capitalism.
ESG are strategies that rely on independent ratings that help you measure a company’s behaviour and policies when it comes to environmental performance, social impact and governance issues.
Ultimately ESG is a set of performance indicators that provide a measure of sustainability, on how companies are managing what are often longer-term strategic risks.
Why is it important to review ESG now?
There’s a growing amount of research that shows a positive correlation between strong sustainability practices and financial performance. ESG best practices look at examining the companies’ relationships with governments, customer communities, regulators, suppliers’ employees and the environment to determine and benchmark the companies’ rankings.
What makes MarketAI different in supporting and enabling business change managers in ESG, is the foundation and unique abilities to bridge the understanding of consumerism against evidence-based data services to empower brands.
The data and insights demonstrate the profound demographic shifts with the largest generational transfer of wealth from baby boomers to millennials, who are actively seeking investments that not just generate positive returns but also positive environmental and social impacts.
We are also seeing even more significant changes in the way in which consumers are making decisions in Gen Z, where the environment and social value of the brands continue to drive the revenue with value.
On the contrary, companies need to make a profit to sustain their business operations but what we are seeing is the dramatic shift between legacy companies transition to ESG best practices versus new-age companies who are built with and engineered to deliver ESG as a core offering.
These significant changes require a magnified approach to enable legacy, enterprise companies to make the necessary transitional shifts to thrive and not just survive, in these new realities of changing consumer dynamics.
As these changes continue to impact the direction of brands, it is really important to examine and explore how investors assess the convenience culture of brands, investors are becoming more sophisticated, investors will be asking for specific funds that focus on the issues that they care about.
is ESG just good branding, based on a sense of principles and not merely for profits?
In the 18th century, Christian groups such as the Methodists and Quakers articulated this idea with clear guidelines to their followers and it has been gaining ground universally.
Fast forward to the periods of human societal changes (90s apartheids, wars and human intellectual development, cultural experiences), this all is affecting how investors allocate their monies.
There’s this increasing understanding in society (consumerism) that we need to care about the climate, about social conditions of employees and so has transitioned to the investment management industry.
Now, then who really are your investors?
Your customers, your buyers, your advocates, your stakeholders, your shareholders and most importantly you, the seller.
So, are you prepared and are leading with ESG best practices?