- Being a sustainable and socially responsible company can increase stock market value and attract and retain key employees.
- Consumers have shown a growing preference for sustainable products and are willing to pay more for them.
- ESG compliance is becoming a requirement for attracting investments, with ESG-mandated assets predicted to grow three times faster than non-ESG assets by 2025.
- Companies that prioritize sustainability and diversity are more likely to attract and retain top talent, especially among millennials and Gen Z.
Why be a good company? What benefits does being sustainable, diverse, and inclusive bring? There are several key advantages. But the one that most people think of first is sometimes the least important.
Being a good company isn’t always enough to drive revenues higher, but it can increase a firm’s stock market value and make it easier to hire and retain key employees.
US consumers do buy sustainable products in the consumer packaged goods categories, according to a pre-pandemic Harvard Business Review article:
“Products that had a sustainability claim on-pack accounted for 16.6% of the market in 2018, up from 14.3% in 2013, and delivered nearly $114 billion in sales, up 29% from 2013. Most important, products marketed as sustainable grew 5.6 times faster than those that were not. In more than 90% of the CPG categories, sustainability-marketed products grew faster than their conventional counterparts.”
There is a myth that consumers choose communication providers based only on price. The choice is more complicated than that. Consumers also consider speeds (both up and down), data allowances, voice quality, coverage, handsets, TV bundles, and such new network technologies as 5G service. But so far, issues around ESG are not really on their radar.
To be clear, sustainability is a topic that every operator talks with me about: All fixed and mobile networks and data centers use energy, and anything that carriers can do to reduce energy use is not only good for the planet, but has a direct impact on their bottom lines. Equally, many of them are passionate about diversity, especially around women in IT. But, once again, that’s more of an internal consideration than a way of driving sales.
Back in 1994. I became portfolio manager for a pension account for three Canadian church organizations. I didn’t even try to select on the basis of gender diversity back then: In the Fortune 500, the percentage of female CEOs in 1995 was a robust 0.0%. There were no sustainability screens for choosing one company over another.
Fast-forward 26 years and ESG compliance is the new “You must be at least this tall to go on this ride.” In a February 2020 report, Deloitte predicted that ESG-mandated assets in the United States will grow three times as fast as non-ESG mandated assets and make up half of all professionally managed assets by 2025.
This trend has been underway for years, but “ESG investing came of age in 2020”: ESG bond values reached nearly half a trillion dollars and stocks with higher ESG ratings outperformed in almost every month. Investors are doing well by doing good.
As of 2020, ESG mutual funds hit $1.7 trillion, up 50% year over year, while firms committing to integrate ESG into their investing managed a collective $100 trillion.
And it isn’t just Fortune 500 companies, or even publicly listed companies. Many recent ESG panels are all women.
At almost all levels, companies that wish to receive investments or be traded appear to need to report on ESG issues and even achieve certain goals, either through soft or increasingly hard quotas. At a minimum.
As of 2019, 69% of US employers were having trouble finding the right people, up from 14% in 2010. In a 2018 report from Korn Ferry, they suggest that by 2030, the talent shortage could create 85 million unfilled jobs and $8.5 trillion in unfulfilled revenue.
Every telecom company I talk to sees the talent crunch as a looming crisis. They have many excellent employees today. But many of those are older and nearing retirement or have skills that are less relevant in 2020 than when they were hired 10 years ago. They all say they need thousands of data scientists, machine learning experts, and people who are mobile-first, understand user experience better, etc. They know that the people they need to hire are going to mainly be 20 to 35 years old, and therefore mainly millennials now, and Generation Z over the next decade.
Roughly half (47%) of millennials make diversity a priority when considering an employer. For Gen Z, that is even higher: “83% of Gen Z candidates said that a company’s commitment to diversity and inclusion is important when choosing an employer.”
TMT companies know all this. According to Deloitte Canada’s 2020 Fast 50 CEO survey, 86% of respondents agreed that being an inclusive workplace was one of the top three drivers of success, up six points from only a year earlier.
As of 2020, ESG mutual funds hit $1.7 trillion, up 50% year over year, while firms committing to integrate ESG into their investing managed a collective $100 trillion.
Many studies have proven that diversity drives innovation, and innovation is what drives any company forward, especially in telecommunications. In order to be sustainable, both from financial and other perspectives, diversity and inclusion are at the core of everything we do in Telenor.
From an investor perspective, companies that excel at ESG will be seen as more attractive and less risky and see higher ownership and therefore superior shareholder returns.
As of 2020, ESG mutual funds hit $1.7 trillion, up 50% year over year, while firms committing to integrate ESG into their investing managed a collective $100 trillion.
As of 2019, 69% of US employers were having trouble finding the right people, up from 14% in 2010. In a 2018 report from Korn Ferry, they suggest that by 2030, the talent shortage could create 85 million unfilled jobs and $8.5 trillion in unfulfilled revenue.
Roughly half (47%) of millennials make diversity a priority when considering an employer. For Gen Z, that is even higher: “83% of Gen Z candidates said that a company’s commitment to diversity and inclusion is important when choosing an employer.”
TMT companies know all this. According to Deloitte Canada’s 2020 Fast 50 CEO survey, 86% of respondents agreed that being an inclusive workplace was one of the top three drivers of success, up six points from only a year earlier.
