The world is changing. In the same way that electric vehicles and artificial intelligence has captured the attention of consumers around the globe over the past decade, investors are starting to see the need to put their money behind more sustainable, environmentally friendly companies in order to see a greater return on investment.
When you invest in a company that follows a strong Environmental, Social, and Governance (ESG) criteria at all levels of its business, you’re not only making a smart choice related to the environment and other pressing issues; you’re also making a smart investment decision. Simply put, investing in ESG companies is good for business.
“Being a good corporate citizen is essential to the way businesses must operate,” said Founder, Chairman, and CEO of Rubicon Global, Nate Morris. “You see this imperative in the purchasing decisions that are being made by citizens around the globe in terms of the companies for which they want to work, the coffee shops from which they want to get their morning pick-me-up, and even the banks at which they want to store their money. It has become a core part of their identity, and here at Rubicon, it has always been a core part of ours.”
ESG Investing: Good for the Environment, and Your Bottom Line
When the Boston Consulting Group did research into this topic last year, they found1 that when companies make decisions based on good environmental, social, or governance practices, the positive impact for the company went beyond just good marketing and public relations. The research showed that such decisions typically created a noticeable boost in the company’s bottom line, as they were often more sustainable than those made to increase a company’s stock price in the short term. Similarly, Entrepreneur magazine recently noted2 that “…regardless of product category, brands with legitimate sustainability claims do better.”
These findings align with those of Chairman and CEO of BlackRock, one of the world’s leading investment management corporations, Larry Fink. “Without a sense of purpose, no company, either public or private, can achieve its full potential,” wrote Fink in his now-famous 2018 Letter to CEOs3. “The public expectations of your company have never been greater. Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society.”
Speaking on the topic recently, Nate called the move toward a greater interest in ESG-focused investing a “step in the right direction,” noting “I am pleased that the broader business community is joining us in taking a more values-based approach. It won’t be long until all investors will be using ESG metrics to determine the value of a company. Here at Rubicon, we have always been ahead of the field in this area—as a Certified B Corporation, these values have been central to what we do since day one.”
Similarly, in a 2017 video detailing how companies can get started with ESG disclosure opportunities4, Libby Bernick of Trucost noted that demand for transparency on the ESG performance of companies is intensifying. “Stock exchanges representing 70 percent of equity markets are implementing ESG requirements, [and] over a quarter of all investments now consider ESG, up 25 percent since 2014.”
Rubicon Global is a technology company that powers a digital marketplace, provides a suite of SaaS products for waste, recycling, and smart city solutions, and collects and analyzes data for businesses and governments worldwide. Transforming an industry which has historically been treated as a utility with only a passing commitment to environmental, social, and governance excellence, we advocate for practices that we believe will drive sustainable, long-term growth and profitability, and help to turn businesses into more sustainable enterprises and neighborhoods into greener and smarter places to live and work.
We look forward to the day when all companies commit to the promises that the ESG criteria continue to empower.
1. CEOs who used to resist sustainability are changing their tune after seeing the numbers (Business Insider)
2. It’s Official: Customers Prefer Sustainable Companies (Entrepreneur)
3. A Sense of Purpose (BlackRock)
4. ESG Reporting: Getting Started (Trucost)