Empowering CSOs from the boardroom

AS THE global climate emergency reaches a tipping point, the world’s ability to transition towards a decarbonised economy over the next 10 years will be critical. Businesses have a major part to play in making the transition to a net-zero world. Many businesses recognise the impetus for change, not least because consumers and investors are increasingly expecting – or even demanding – that companies look beyond generating profits to focus on ESG to drive sustainable businesses.

According to the 2021 EY global institutional investor survey, 86 per cent of respondents said that investing in companies that have aggressive carbon reduction strategies is an important part of their strategy. From the consumer perspective, the sixth EY Future Consumer Index released this year found that close to half of global consumers will prioritise environment and climate change in how they live and the products they buy; and 56 per cent will be more likely to buy from companies that ensure what they do has a positive impact on society.

Companies that embrace a coherent ESG strategy and demonstrate tangible success may also benefit from lower cost of capital, given a mismatch between the growing amount of investment dollars looking for genuine ESG leaders and the limited supply of these companies. Further, according to an EY-Parthenon analysis, which measured the profitability of the top sustainable corporations globally based on Corporate Knights’ 2020 Global 100 ranking, sustainable companies had outperformed their industry peers on gross profit, EBITDA, EBIT and net profit metrics.