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Why ESG Still (and Will Always) Matter

By RDG Director of Innovation and Research Doug Radcliff

Environmental, Social, and Governance (ESG) and Corporate Social Responsibility (CSR) are terms that have been around for decades, sometimes at the forefront of discussions on the future while other times, an afterthought. It may feel like ESG, which was a very prevalent topic over a year ago, has faded in the national consciousness of late. However, when considering long-term realities it will remain an important topic for communities and companies. It seems that ESG and CSR should consistently be emphasized, not only for sustainability in business and society, fighting climate change, advancing human rights, but for other connected benefits as well.

The idea is simple: strategically investing in your (local) community for long-term advancements, growth, etc. On the surface, ESG investing builds long-term sustainability, helping to build the future, fight climate change, socially progress, whatever it may be. These are strong motivators, and ideally are moral and ethical motivators for businesses. However, let’s be serious and recognize there also must be economic motivators. A McKinsey analysis showed that “financially successful companies that integrate ESG priorities into their growth strategies outperform their peers.”

Talent Attraction:

So many cities and businesses are pouring money into various forms of talent attraction marketing. It is important to recognize that ESG investing naturally leads to talent attraction and retention. Not only are more employees expecting ESG commitments, but investors and customers as well. According to Forbes, “58% of US workers cite respect, health benefits and work-life balance as the most important motivators for them, yet salary was only prioritized by 42%.” Furthermore, 80% said “it is important for company values to align with their own and 75% expect their employer to be a force for good in society.” Meaning, most employees are not only hoping for the company they work for to be a driver of social progression, but they are expecting it. 

Changing Workforce:

Estimates state that by 2029 Gen Z and Millennials will make up 72% of the global workforce (52% in 2019). Not only are these generations profoundly influenced by social justice issues and climate change, but generally have strong desires for equity and sustainability in the world. Placing greater importance on ESG issues, employees more and more expect their employers to be undertaking ESG investing. As the workforce, society and the employee change and develop, so must the employer.

ESG investing is much more than investing in a project, community, region, etc. It is investing in the future. Not only the future of the world, but also the future of the business and of the local and regional communities in which said business is investing. They are saying “we believe in our community and its future, and therefore, you should come work and live here.” A business investing in its community through sustainable ESG shines a more positive light not only on its own professional atmosphere, but also its own desire to improve the community where it operates, and its employees live. 

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