How well a company performs on environmental, social, and governance (ESG) issues is becoming an increasingly critical performance metric for investors, consumers, and management.
Investors and rating agencies are demanding ESG reports. Investors believe that companies with a strong ESG program perform better and are more stable—better at retaining customers and employees, for example.1 On the other hand, poor ESG practices pose environmental, legal, and reputational risks that can damage the company and its bottom line. And while ESG reporting remains voluntary in the U.S., the Securities and Exchange Commission is studying ESG reporting requirements.
Consumers say they want to buy from companies that are environmentally sustainable, take a stand on social justice issues, and demonstrate good governance. And they say they are even willing to pay more to help companies address ESG issues.