Now or never — why ESG is a business imperative
While talk of sustainability isn’t anything new to the C-suite, the Covid-19 pandemic and other recent events have turned conversation into action. More and more consumers are baking corporate responsibility into their buying behaviour. At the same time, businesses have had to reconsider their core processes and pay attention to customer needs more closely than ever before.
As a result, businesses that don’t put environmental, social and corporate governance (ESG) front and centre stand to lose out. In fact, numerous studies1 have shown a positive relationship between ESG scores and financial returns.
A 2019 survey2 of more than 1,000 CEOs from around the world by the UN Global Compact found that 87 per cent believe the UN’s Sustainable Development Goals (SDGs) provide an opportunity to rethink approaches to sustainable value creation. Some 70 per cent of those CEOs “see the SDGs providing a clear framework to structure sustainability efforts”.
The business community is experiencing significant shifts around ESG priorities driven not just by Covid-19 but also by the economic downturn, social unrest and extreme weather events. “For consumers, ESG issues are influencing what companies they work for, buy from and invest in. Similarly, businesses are putting much greater focus on ESG as their customers and investors lean in,” says Gina Mastantuono, ServiceNow’s Chief Financial Officer. ESG, she says, is no longer a niche investment focus: “It’s mainstream — it’s good business.”
But what does sustainable value creation really look like and how can companies ensure their ESG efforts not only make a difference but also impact the bottom line?
ESG demands new capabilities and monitoring. However, says Mastantuono, “The more you integrate it into your core business strategy and operational execution, the more likely you are to attract and retain top talent, drive innovation, reduce risk, build stakeholder trust and ultimately see bottom-line impact.”
There is no point in taking a wait-and-see stance. “We see a ton of parallels between ESG and digital transformation,” says Mastantuono. “Companies that took the leap early, made mistakes and learned — those were the ones that navigated the recent Covid, environmental and geopolitical crises with resilience. They far outperformed the ‘wait-and-see’ crowd.”
ESG initiatives must be managed as part of the way companies do business, with “the same attention to prioritisation, setting goals and metrics, checkpoints, transparency and accountability”, says Mastantuono.
ServiceNow’s NextGen Professionals programme, for example, provides underrepresented communities with the training and support they need to become certified ServiceNow professionals. It was created in direct response to customers who needed help hiring qualified talent to implement their ServiceNow solutions.
“NextGen opens the door to minorities, veterans and other groups traditionally left out of the technology industry, while creating a talent pipeline for our customers,” says Mastantuono. “It’s a win-win-win for these communities, our customers and our business.”
Businesses should also be having regular conversations around consumer behaviour. A consumer is a buyer, says Mastantuono, “but also an employee, investor and influencer”.
An effective ESG activation treats consumers as stakeholders, working to address the issues that concern them most with the transparency and consistency that builds trust.
“The conversation needs to be, ‘What matters most to my customers, employees, investors and their communities? What are the environmental, social, reputational and operational risks that could affect us and them?’ Just as importantly, what are the opportunities?” explains Mastantuono.
We want to focus on new innovations to ensure a more sustainable, equitable and ethical future
And tech can help with this by connecting, mobilising and putting into action goals and intentions. It can boost ESG efficiency by more easily and continuously capturing reliable data and providing enterprise-wide visibility to help manage and tune actions based on performance.
Technology can also help align, integrate, manage and report across an ESG portfolio, even as it expands and gets more complex and dispersed. But you do need to do the groundwork from the start, says Mastantuono. “If you create a strong, unified technology foundation now, it can support the people, processes and tech you need to adapt throughout your ESG journey.”
