Salesforce co-CEO Marc Benioff has been preaching about it for years the importance of corporate social responsibility, the idea that companies should not only be concerned about making money for investors, but also about making a positive contribution to the wider community in which they operate.
He could be on to something. Increasingly, consumers and some investors want to do business with companies that are at least to attempt to do the right thing.
In fact, in recent years, a term has sprung up around a series of corporate initiatives to conduct business with a view to broader social responsibility. ESG, or environmental, social and governance, is an umbrella term that originated around this set of goals, including community outreach, DEI efforts, thoughtful leadership, environmentally sound policies such as a net zero emissions target, and running your business in an underserved environment. others in an ethical and responsible manner.
While typically applied as a filter for investors, companies have also adopted the term as a sort of organizational moral compass and set of principles to try to adhere to as part of their value system.
As this idea begins to take shape, CNBC reported that there is already a opposition to the concept among some Fortune 500 executives angry about reporting requirements.
“Data is important, but not everything. How do you measure the soul of a company?” Robert Former, CISO/VP Security at Acquia
Last year Frank Slootman, CEO of Snowflake, shook some feathers he told Bloomberg TV, “We’re actually very sympathetic to diversity, but we just don’t want that to take away the merit. If I do that, I’m literally going to jeopardize the company’s mission.” He went on to say that other CEOs agree, but won’t say so publicly. While he later ran those comments back somewhat, the CNBC report suggests that ESG is being attacked more broadly by executives as well as by some Republican politicians.
In addition, a Harris survey of 1,491 executives in 16 countries, commissioned by Google, found that executives are not always honest about ESG efforts. In fact, 58% of respondents believed that “green hypocrisy exists and their organization has overestimated their sustainability efforts,” according to the report. a report from Google.
But these executives may be out of touch with consumer and investment sentiment. A Harvard Business School blog post by Tim Stobierski lists 15 findings from several studies that could turn business leaders’ minds into questioning the value of ESG efforts.
Recall that he writes that “70% of Americans believe it is ‘somewhat’ or ‘very important’ for companies to make the world a better place,” and that 41% “of millennial investors put in a significant amount of effort” to understand a company’s CSR (Corporate Social Responsibility) practices, compared to just 27% of Gen X and 16% of Baby Boomers.”
londonbusinessblog.com spoke to leaders from three companies — Kudos, beamery and Acquia — to get their thoughts on ESG and why they are passionate about working in a place that cares about the world as much as they do making money for shareholders. (Plume and Beamery are late-stage startups, while Acquia was late-stage when it was acquired by Vista Equity Partners in 2019.)