The Up (and Down) Side of ESG Scrutiny
As climate change, economic strife, and community malaise hit closer to home, people are feeling expected to align their wallet with their social conscience. While price, product, and service will always be key, how companies measure up on ESG initiatives is going to be a much bigger factor in future purchase decisions.
Today, we are all being overwhelmed by a polycrisis. The list of crises is long. The weather (from heat waves to forest fires to floods and droughts) at home and around the globe. The relentless whittling away of our communities and declining social cohesion, driven at least in part by social media and a political elite who willingly play off these divisions for their advantage. Finally, the economy, inflation, and the ever-pending recession, which is widening the gap between the have and the have nots. The stage is being set for intergenerational conflicts as older citizens look to protect their way of life, and younger cohorts wonder about their future.
Twenty years ago, I would have assumed that all these pressures would fall squarely at the feet of governments. Elections would be fought over well-articulated and carefully crafted policies being proposed to convince people to vote for Party X or Y. But today it appears that governments may get a pass on having to tackle the tough issues.
Why? Well, not because voters are in a sympathetic mood or feel our governments are doing their best, but because people largely feel that governments are simply not up to the task of tackling these issues.
Enter the corporations, who have found a way to reach into our lives (if not our hearts) and make themselves a part of our families. Successful businesses have focused on what consumers need and delivered on those needs in a timely, consistent fashion. Think about logistic and shipping challenges and Amazon comes to mind. Think about the climate and electric cars and Tesla comes to mind. Think about your need for fresh veggies and your desire to explore different cultures through food and all of the major grocery chains that fit that bill. Most companies recognized a long time ago what governments today have not. That is the need to match their offer with the needs of their constituency and deliver what they promise, making amends (rather than excuses) when things go wrong.
With the evolution of corporate purpose shifting toward a greater focus on ESG (Environmental, Social, Governance) issues, the stakes are getting higher for businesses.
