With environmental, social and
governance (ESG) issues now
strongly influencing a business’s
financial performance, sustainability
must be at the heart of the
post-COVID-19 resilience agenda.
Environmental, social and governance (ESG) concerns often used to be treated as marginal issues. However, companies now increasingly see them as central business priorities. According to FTI Consulting’s Resilience BarometerTM, published in January 2020, 96% of companies were under pressure to improve their ESG offerings, with 34% under extreme pressure.
of business leaders report that their companies are under pressure to improve their ESG and sustainability offerings
is the #1 CSR issue reported
by business leaders
In particular, investors’ ESG agenda has become a priority for boards. FTI’s Global Investor Insights 2020 reported that 82% of institutional investors believed a company’s value increased 20% or more when it had a positive ESG rating; 81% of institutional investors surveyed for FTI’s ESG Resilience Compass 2020 faced increasing pressure to divest from companies with poor ESG ratings.
Stakeholder demands for higher ESG standards will only increase in the wake of COVID-19 as organisations come under growing scrutiny from governments, shareholders, customers and public – especially if they have benefited from any form of state assistance.
With ESG performance intrinsic to stakeholder confidence and financial viability, businesses’ ability to weather future crises will depend heavily on satisfying stakeholder expectations in this area. Sustainability must therefore be viewed as an important element of resilience.
Companies need to look well beyond mere regulatory compliance: they need to anticipate and adjust to shifts in government policy and in shareholder and public attitudes, while remaining profitable. The necessary insights into emerging attitudes can only be gained through ongoing stakeholder engagement and communication.
This communication must be two way, of course. Corporate reporting needs to address sustainability issues fully: the ESG Resilience Compass 2020 found that 88% of institutional investors believed there should be more reporting on the actual impact of businesses’ activities.
Whatever the business’s size, industry or location, sustainability is an important tool in building resilience and protecting value for today and tomorrow.