Telling the Whole Story
More jobs and cheaper energy. In the lead up to this week’s Super Tuesday primaries, these have been constant refrains from the candidates for the Republican presidential nomination. They have also been central messages from President Obama. No doubt, they will continue to be among the key themes repeated between now and November 6.
Almost as if on cue, comes a new study by Deutsche Bank and the Rockefeller Foundation. The report suggests that a renewed emphasis on energy efficiency retrofits across the country could save Americans $1 trillion over the next ten years and help create 3 million jobs, all while reducing carbon dioxide emissions by 600 million metric tons, roughly 10% of current levels.
It is an exciting and compelling prospect. But aside from how well this narrative plays into election year campaign themes, it underscores the connection between sustainability and a company’s financial performance. And this is only the latest of several recent studies that show increasingly stronger connections between environmental, social and governance (ESG) issues and business performance and success.
Take a look at the new study by researchers at Harvard Business School and London Business School – The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance, the KPMG study – Expect the Unexpected: Building Business Value in a Changing World, and the third annual Sustainability & Innovation Global Executive Study by MIT Sloan Management Review and The Boston Consulting Group.
More evidence of this connection is found in Responsible Investment: Creating Value from Environmental, Social and Governance issues, a new study of the private equity sector by PricewaterhouseCoopers. The research found that 94 percent of respondents believe ESG activities can create value.
For years, my firm has provided counsel to companies around the world, big and small, on how to embrace corporate responsibility and sustainability, and how to communicate effectively about that commitment. Increasingly, as more companies are seeing the connection between financial and non-financial performance, they recognize the need to integrate their communications and reporting – to tell the whole story.
To help provide this guidance, we’ve partnered with Harvard Business School Professor Robert G. Eccles, one of the world’s foremost experts on integrated reporting, and one of the authors of the aforementioned HBS study. Research by Professor Eccles finds that companies with a long, consistent track record of engaging in and disclosing efforts to operate with ESG policies in mind significantly outperform their counterparts over the long-term, both in terms of financial performance and rate of return for investors.
As the size, reach and influence of global corporations continues to grow, so too does the public’s demand for transparency and accountability. According to new H+K Strategies research, more than two-thirds of Americans hold corporations directly accountable for their actions. But the same holds true for the positive impact a company can have. A new Deloitte Touch Tohmatsu Limited study conducted by the Economist Intelligence Unit finds that 76% of respondents believe that the value of a company should be measured not only by its profits, but by the positive contributions its core business makes to society.
For business – whatever the product, whatever the sector – it seems there’s never been a better time to tell the whole story.
Chad Tragakis is Senior Vice President, Hill + Knowlton Strategies, Washington