While my team and I are in the process of finalizing the results of an extensive survey on the adoption of ESG (Environmental, Social, & Governance) by Global IT and Business Service Providers, Mark Hillary, a technology and customer experience analyst, invited me to be a guest speaker on his CX Files podcast to talk about the impetus behind our ESG survey. Both the podcast and the survey results will go live soon, in the meantime, I wanted to share a recap of some key points of our conversation.
Mark Hillary (MH): How do you define ESG? And how does ESG differ from CSR (Corporate Social Responsibility)?
Hemant Puthli (HP): ESG has not just evolved from CSR alone. ESG has the governance dimension which focuses on business practices and ethics plus expanded environmental and social dimensions.
Some ESG metrics are very specific and already have a great deal of support and agreement such as carbon footprint, greenhouse gas emissions, and child labor or slavery. However, ESG also covers a wide range of issues that go far beyond these well-defined areas.
There is increasing pressure on brands to demonstrate ESG credentials. It started with investors choosing where to invest their capital and has now expanded to consumers and employees. Today, you are unlikely to attract the best talent without a well-defined ESG strategy.
ESG has evolved from companies trying to do the right thing through good corporate citizenship into a much broader set of principles that affect employees, customers, suppliers, and investors.
MH: Do you think that we’ve passed a tipping point on the importance of ESG? It seems that every time there is a business crisis some business leaders reduce the urgency of their ESG strategy.
HP: I don’t think we have reached the tipping point for ESG just yet, but we are getting closer. The Covid pandemic accelerated interest by consumers and employees in ESG – the way that companies source their products and their work environment – that will soon become impossible for brands to ignore.
In our survey, we analyzed ESG in terms of both culture and attitude – enforcement of ESG directives from leadership vs. how much ESG is an accepted part of the corporate culture.
While a company leader may use the excuse that they can’t focus on the environmental priorities given the situation in Ukraine, it would not appear justified to completely set aside all ESG principles like diversity initiatives. ESG principles are gradually becoming normalized and expected.
MH: Will the tipping point be consumer led? Such as fashion or retail customers asking brands what they are doing to improve their supply chain or even asking who is handling their customer service processes? Will end customers get more genuinely interested in the supply chain and where products come from?
HP: Consumers are already asking questions, but this needs to achieve critical mass – beyond a few more socially conscious consumers – to spur companies to action. Companies will consider ESG to be essential when they realize that their failure to offer a clear and strong message and strategy focused on ESG will negatively impact business. There are three important pressure points for ESG – talent attraction, brand trust, and happy investors.
There was a time when I thought that this change would only happen for my children’s generation, but I can now see a genuine shift taking place along all these aspects of business strategy. I believe we will pass the tipping point where ESG is an essential part of the regular go-to-market strategy for any business well within my lifetime.
MH: Are you finding that B2B companies providing business services or technology to other companies are now finding it essential to embrace ESG because their clients are demanding it?
HP: Yes, absolutely. This really was the genesis of the idea for our survey. Many of our clients were asking us about ESG especially the ESG measures that IT and business services companies published in their annual reports. The question we heard most often was ‘is this real or just greenwashing?’
We designed the survey to objectively determine the nature and extent of ESG adoption by global IT and Business Service Providers. We look forward to sharing those results soon.
For more information on Neo Group, please visit neogroup.com.
CC Photo by Markus Spiske