Unlock the opportunities: are ESG and sustainability driving your business strategy?

Tom Keohane

Organizations need to address ESG and sustainability because it’s the right thing to do and to avoid related risks. But by taking decisive action, leaders can also unlock significant growth opportunities.

Here are the top five ESG and sustainability-related opportunities that business leaders need to consider.

An infographic showing the various opportunities for businesses embracing ESG.

1. Cost and operating efficiencies

By improving energy efficiency and/or utilising energy from renewable resources, organizations can reduce their own costs. This will also mitigate against fossil fuel and raw material price volatility, further driving business resilience.

Governments may offer additional incentives for cleaner energy so these can further reduce operating costs.

Organizations should also consider their role in enabling third parties or suppliers to achieve sustainability commitments, which will lead to far-reaching, long-term cost savings.

2. Access to finance

ESG and sustainability are becoming increasingly key considerations for future investment decisions. For example, Aviva have found that 72% of pension savers consider ESG factors important when investing.

Capital markets are also creating ‘green bonds’, showing there is value and finance available to the right organizations. BlackRock has reported “a tectonic shift of capital”, with sustainable investments reaching $4 trillion.

3. Access to talent

ESG and sustainability action can drive employee recruitment and retention by better aligning the organization with personal goals, purpose and values. Employees gain an enhanced sense of motivation, fulfilment and emotional bond when they know their workplace makes a positive impact on society.

4. Customer or brand loyalty

Organizations that embed sustainability in everything they do, including investing in sustainable services and products, build brands that are authentic and resonate with customers. This drives loyal, long-term customer retention, resulting in a willingness to spend more, provide quality feedback and advocate to others.

5. Innovation

Leaders can leverage ESG and sustainability as catalysts for wider innovation and value, driving an improved culture, mindset and capability as well as differentiation from competitors. This can range from new products and services to wholescale market disruption.

Some businesses will be able to enjoy ‘first mover’ advantage within their industry, gaining the full benefits associated with building and harnessing an innovative capability.

Transforming to pursue ESG and sustainability-related opportunities

While the ESG and sustainability-related opportunities are abundant, many organizations are not able to fully exploit them. They may need to change their strategy, build new capabilities, or redesign their organizational structures.

But by establishing clarity at the outset over the opportunities they want to pursue, organizations will be better equipped to manage complex change and transformation, ultimately turning desired outcomes into reality.