Investing in a sustainable future isn't just a job for the government
Written by PATSY DOERR
Building a sustainable future is not solely the job of government. Investing in our communities, building a diverse global workforce, and investing in green technology needs to be a joint effort between the public and private sector. In my role as a global head of corporate responsibility and inclusion, I try to ensure just that.
My job is getting easier. That’s not something most people get to say in this age of acceleration. In the corporate world, decisions are driven by the need to maximize profits for shareholders. The reason my job is getting easier is because investors are now recognize the financial benefit to investing in companies that operate in an ethical manner. This growing awareness helps us to work better with governments around the world to advance a sustainable future.
On the road
I spent the last several weeks speaking at conferences targeting investors and analysts who are putting their clients’ money into companies, funds, and solutions that have a positive social impact. Of particular interest is the demand to see companies build diverse teams. This means thinking outside of the traditional definitions of diversity and including diversity of thought, style, approach, and life experience. Diverse teams are more likely to be creative, think outside the box to solve problems and challenge the status quo.
I especially wanted to share not only my own thoughts, but what I was hearing from other panelists. These are real business issues that resonate with customers, consumers and investors. Just five years ago, one would see 10 people in a conference like this. Now, there are more 150 at almost each conference, no matter where you are in the globe.
It’s critical to find the right balance between diverse representation and building an inclusive culture. Neither sits alone. And the balance will ebb and flow, depending on the evolution of the journey for each company. It’s also important to find the balance between qualitative and quantitative measures when assessing companies. The metrics are important, but equal to employee perception, which drives external interest and support from customers, talent, and investors.
A decade ago, these were considered soft issues. The function was often standalone and not a part of the C-suite dialogue. Companies are now making corporate responsibility and inclusion a top priority with the C-suite often taking the lead and driving best practices forward.
The rise of transparency, expectations from the global workforce and the economic benefits of sustainability are driving this forward momentum. This convergence makes my job easier. I no longer have to “sell” the idea that behaving ethically is good for financial performance and this has made our function stronger.
The rise of transparency
Innovations in technology have made us more connected than ever before. We’re a global community and access to data, the availability of information and instant news means that companies are now expected to be transparent in everything they do.
Supply chain risk, carbon footprint, and especially diversity of workforce — all of this information is all becoming public and companies that are not behaving responsibly are at risk of ruining their reputations. Investors and analysts are increasingly demanding environmental, social, and governance (ESG) data prior to making investment decisions. This trend is continuing to grow as regulators globally are mandating that this information be made public.
Tuned in workforce
The U.S. Bureau of Labor Statistics predicts that by 2030, millennials, who comprise the hyper-connected, tech savvy generation, will make up 75 percent of the workforce. This is the first generation to have grown up with the concept of corporate social responsibility. It’s no longer an added benefit for corporations to positively contribute to their communities, it’s a requirement.
The current generation wants to work for companies that make a positive contribution and make no mistake, the best and the brightest will go to those companies that are making a positive social impact and have the most diverse teams. Again, investors recognize this trend and are putting their money behind the companies that are attracting (and retaining) this next wave of innovators.
Cost benefit analysis
Not investing in sustainability is far costlier in the long term to governments and corporations than making the decision to reduce our global carbon footprint now. Climate change is a worldwide threat with severe economic consequences.
On the upside, there is also a positive financial gain when choosing to run environmentally friendly operations. New technologies have made it easier than ever to reduce your environmental impact and money is flowing into these “green innovations.” This is a whole new economic upside for doing the right thing.
The next decade
Operating ethically is now a bottom line as the C-suite increasingly recognizes the financial benefits. Markets will follow the trend as money continues to flow to the companies that are making smart investments in sustainability, diversity and transparency.
Over the next decade, companies that embrace these trends will limit their reputational risk, enhance their standing in the global community, attract and retain top talent, and lower their operational costs. The end result is stronger returns for shareholders which is a win-win for everyone.
Patsy Doerr is the global head of corporate responsibility and inclusion at Thomson Reuters.
SOURCE: The Hill