There is a groundswell of professional observations that ESG / Sustainability has truly gone mainstream over the last several years. I can think of no better way to validate this growing understanding than to explore the ultimate question we must ask … is ESG / Sustainability leading to real return on investment?
The answer is … “yes,” if you know where to look.
Evidence is mounting that there is real ROI advantage to companies that include ESG / Sustainability as an integral part of competitive, capital and operational strategy.
Quickly “book-ending” these findings with a leap from top-line to bottom-line evidence…
To validate that companies are actually realizing real return on their ESG / Sustainability investments and that it is not just a bunch of third-party rater / ranker / researcher hype, I decided to drill-down on the Barron’s 100 list (Campbell Soup, cited above, is #57 on the list) in two ways.
First, I glanced at the list to identify a handful of companies whose ROI vignettes were fast to find via internet search. One can infer the ROI for the following investment stories as imbedded in their P&L:
Then, I used AlphaSense to query the entire Barron’s 100 list to see what these companies have been directly communicating in their company presentations, press releases and annual reports over the last two years:
Note that financial sector companies provide an interesting double-sided vantage, both as the beneficiary company for their own ROI and for a glimpse at related institutional investor returns.
Since I have previously used AlphaSense to search across all companies on a specific ESG “hot topic,” validating that company carbon reduction is producing ROI and being used for competitive positioning, it is reasonable to assume myriad ESG hot topic queries could be run for the Barron’s list companies.
While the inference is very strong that companies are realizing real return on their ESG / Sustainability investments, it is still very hard to find companies that are bold enough to connect the dots specifically with clearly stated ROI correlation in absolute dollars or proportion.
Dear Company Leadership:
Isn’t it time to start taking credit for your effective Sustainability program performance successes by selectively connecting the large ROI dots? Such clear statements of fact would also help investors and desired third-party raters / rankers / researchers / stakeholders appreciate your company’s demonstrated ESG / Sustainability commitment and efforts even more.
1. Project ROI: Defining the Competitive and Financial Advantages of Corporate Responsibility and Sustainability – 2015
2. ING: From Sustainability to Business Value, Finance as a Catalyst – 2018
3. Nielsen: Consumer-Goods’ Brands That Demonstrate Commitment to Sustainability Outperform Those That Don’t – Oct 12, 2015
4. Barron’s: Barron’s 100 Most Sustainable Companies – Feb 3, 2018
5. UPS: Company Sustainability Report
6. W.W. Grainger: online sustainability report
7. Kellogg’s: online sustainability report
8. AlphaSense: Examining Carbon Reduction ROI and Competitive Positioning, by Pam Styles – Jan 19, 2016
Pamela Styles is principal of Next Level Investor Relations LLC, an Investor Relations consultancy with dual IR and ESG / Sustainability specialties.