The focus on environmental, social, and governance (ESG) goals and sustainability emerged from a series of significant shifts. We are experiencing a heightened risk landscape, shifting economic interests, the rise of stakeholder capitalism, accelerating digital living, new business and work models, and health and wealth protection gaps. Companies of all sizes are expected to transform around sustainability. Those focused only on profit maximization may face consequences risking their reputation and economic viability.
Today, multiple stakeholders – including employees, consumers, investors, policy makers, and the community – are assessing whether to work for, buy from, invest in, regulate, and otherwise support businesses, based on their commitment to sustainability, inclusion and social responsibility. Investors are examining organizations’ commitment to – and achievement of – ESG goals.
This burgeoning focus on and rise of stakeholder capitalism is driving organizations to commit to a purpose beyond simply earning money; to caring for the health, wealth, and wellbeing of the people who work for them; and to tending to the planet, reducing their carbon footprint and accelerating digital living.
Responsible employment practices play a role beyond preparing people for the future of work. Stakeholders favor organizations with new business and work models that focus on diversity, equity and inclusion; pay their workers a living wage; offer a comprehensive variety of benefits – in short, those that take care of the people who work for them as full-time employees or gig workers.
Multi-stakeholder empathy is driven by four areas
External factors including
- Customers: making choices based on ethical products and practices
- Activists/Media: highlighting inaction, especially in regard to climate change
- Regulators and rating agencies: reporting on ESG progress and actions
- Investors: vocalizing their intent around sustainability investment and ESG
Internal factors including
- Employees: caring about organizational practices and ethical conduct
- CHROs: shouldering responsibility for ESG progress and outcomes
- Executives: increasingly setting ESG and sustainability goals
- Boards: assessing sustainability and competitiveness by their reported progress on ESG metrics
Combined, all of this leads to a purpose-driven organization
Three ways to make progress on sustainability transformation
Navigate the rapidly changing world of benefits with a simple, strategic and central approach that may strengthen governance.
Design and implement a transformation strategy that embeds sustainability across your business. Deliver focus and purpose, culture enhancement, goal alignment, responsible employment and sustainable investments.