The Why
There are two forces driving middle-market business – stakeholders and supply chain.
Stakeholders
Stakeholders are any individual, group or entity affected or impacted by your business. They provide your operational context.
We live in an era of stakeholder capitalism when the people and organizations touched by a business matter as much as owners and shareholders. This is particularly true for middle-market companies, most of which aren’t publicly traded and therefore aren’t directly subject to SEC reporting guidelines.
Delivering value for stakeholders in addition to shareholders is now table stakes, and ESG is synonymous with best practices in management. Stakeholders want ESG integration in companies they work for, invest in and buy from. Failure to address their needs can make or break your business.
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If your board of directors, governing documents and KPIs aren’t aligned with ESG, your efforts to onboard a program may be wasted.
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The largest segment of consumers buy from purpose-driven brands, and your clients may soon mandate ESG initiatives.
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ESG helps you control your own narrative. If you don’t, someone else will, and your company could suffer reputational damage.
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Millennial and Gen Z shoppers are more likely to buy based on personal, social and environmental values, and over 70 percent of Millennials said they chose a job in a more sustainable company.
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Americans cite worker treatment as the number one ESG issue, and so do CFOs and other senior leaders in middle-market companies. Getting ESG right makes your company sticky for top talent.
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Firms with strong ESG ratings had returns up to 3.8 percent higher than those without, and even private money is looking for integrated ESG as it’s correlated with greater value creation.
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Data aggregators and rating agencies scrape open-source data about your company. Is your ESG performance accurately represented?
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ESG is the new SWOT tool, and it can provide meaningful insight into your competitors’ businesses. Do you know how to use it?
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ESG demonstrates going beyond mandated requirements and can help satisfy regulator inquiries into your business.
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Exploring and mitigating ESG risks can future-proof your company and lower insurance rates.
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Bigger businesses are shoving ESG inquiries and mandates down the supply chain to you. And your suppliers may choose not to work with you if you’re not pushing forward with ESG.
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Major developed and developing markets like the European Union, China and India now require ESG reporting. And ESG integration is a credible way to demonstrate good corporate citizenship in the communities in which you operate.
Supply Chain
We’re all a part of others’ supply chains, and most of us are one to two degrees of separation away from publicly traded clients. Those clients must report ESG performance to the SEC, the European Union and other entities. And for most companies, 70 to 80 percent of their environmental footprint is in their supply chain – that’s you.
To stay competitive, it’s imperative to shrink and improve environmental and social impact to help your clients meet their aggressive ESG goals.
