The concept of ‘Corporate Responsibility’ has been evolving as the public becomes more aware of efforts that businesses have made in achieving non-financial values, such as diversity & inclusion, environmental stewardship, etc. For investors, they start to keep an eye on implementation of corporate responsibility related to environmental, social and governance (ESG) factors by companies. To respond to this trend, for-profit organizations should review their impact on stakeholders and act accordingly.
Investors nowadays become more interested in ESG factors. The asset size of socially responsible investment keeps expanding since 2014—currently $22.89 trillion of assets under management by responsible investment strategies. A study from Oxford University shows that the majority of investors consider ESG as influential factors to their investment decision making. Patsy Doerr, Global Head of Corporate Responsibility and Inclusion at Thomson Reuters, pointed out that it will no longer be a choice for companies to embed social impact into their business and brand strategies. Strong focus on ESG factors will be the key investment theme for years to come and companies will have to take them into consideration when formulating brand strategies in order to maintain their competitiveness, as well as their investment case.
To address investors’ increasing concern for ESG factors, it is expected that companies should align business strategies with the goal of promoting sustainable and inclusive growth and managing ESG risks. Another focus will be putting effort on promoting diversity and inclusion within organizations as employees are demanding their companies to act on relevant issues and investors see diversity as one of the criteria for evaluating company potential. Launching corporate responsibility strategies related to employees is also a feasible approach. For example, organizing programs to provide employees with opportunities to develop their talents.
ESG reporting is another area that companies should focus on. While over 85% of the S&P 500 start publishing sustainability reports, ESG reporting is gaining its importance and investors utilize reports to facilitate decision making. By providing quality data for ESG disclosure and connecting ESG data with company overall financial performance, it is likely that companies can gain a competitive edge on ESG reporting to make impacts measurable.
Source: https://www.forbes.com/sites/susanmcpherson/2019/01/14/corporate-responsibility-what-to-expect-in-2019/#9e300c0690f4
