Consumers increasingly go for environmentally and ethically sustainable products. A 2020 McKinsey US consumer sentiment survey showed more than 60% of respondents preferring to pay more for a product with sustainable packaging. A NielsenIQ study found that 78% of US consumers saying that a sustainable lifestyle is important to them.
ESG’s beginning traces back to a mere 37 years-“Sustainability” was first unveiled in 1987.
“..The “sustainability” concept as we know it today dates back to … 1987 in the famous Brundtland Report (also entitled “Our Common Future”) produced by several countries for the UN… The term “sustainable development” first appeared in an official document signed by thirty- three African countries in 1969, under the auspices of the International Union for Conservation of Nature (IUCN)..”- www.activesustainability.com
What began as “sustainability” where the focus was on ecological resource utilization, transformed into a
much larger social ‘development mandate.’ As you now understand, it now embraces ending poverty, building economic growth and even addressing social needs….and has transformed to ESG: Environmental, Social and Governance (ESG).
For the record, “Environment” signifies reducing carbon dioxide (CO2) emissions and protecting the natural environment. “Social” is for enhancing the work environment and advancing diversity, while “Governance” is practicing fair and transparent management and actively disclosing information.”- (tokyocentury.com)
Later, the term ESG was used in a 2005 study “Who Cares Wins”. It was conducted in response to
the then UN Secretary Kofi Annan’s call for major financial institutions to join UN “to find ways that will
Integrate environmental, social, and governance concerns into capital markets”.
Today ESG has come to be seen as a broader concept that enables organizations ‘business practices and performance‘ to integrate diverse sustainability and ethical issues.
Let this be said: ESG has also been criticized lately as an additional bureaucratic burden that eats up valuable resources in organizations without a significant contribution to its bottom line. On the other hand, today’s millennial and gen-x consumers stay away from brands that fail on ESG. Are consumers the only stakeholders that stay away from ESG brands? Another critical stakeholder-the investor-too is increasingly reliant on the organization’s ESG.
So much so that most global investors (60%) say their ESG investing to be bringing in higher performance yields. A huge majority (78%) say that they ‘would pay higher fees for ESG funds’.
The Sustainability Megatrends Report by Cushman & Wakefield, from which the above trends have been discovered, also stresses that ‘sustainability linked loans heavily contribute to global sustainable lending, and has become a growth driver in green finance.’
The ESG trend that has been on the move for the last few years, has now stepped up to become a mega trend.
