Why Doing Good is Good for Business: The Power of ESG Strategy
In today’s business world, doing good is not just a moral choice - it is a smart strategy. ESG expert Lisa Basford helps companies mitigate risk, attract investment, and drive growth. This article explores why embedding ESG is key to long-term success.
Why Doing Good is Good for Business: The Power of ESG Strategy
In today’s business world, doing good is not just a moral choice - it is a smart strategy. ESG expert Lisa Basford helps companies mitigate risk, attract investment, and drive growth. This article explores why embedding ESG is key to long-term success.
Why doing good is good for business.
Lisa Basford, a specialist ESG consultant for BHP, has been helping businesses and charities navigate the world of Environmental, Social, and Governance (ESG) since 2020. With previous leadership roles at O2 and IHG (InterContinental Hotels Group) Plc, she brings extensive expertise in corporate responsibility and sustainability. As a Fellow of the Institute of Corporate Responsibility & Sustainability and certified by the Non-Executive Directors Association, Lisa understands why ESG is no longer optional - it’s essential.
An ESG strategy is critical for any business, large or small. Embedding ESG considerations into everyday operations can help organisations mitigate risk, access funding, unlock commercial opportunities, and attract employees. In this article, Lisa explores why ESG is not just about ethical responsibility but a key driver of long-term business success.
ESG, corporate responsibility, sustainability, ethical business - Don’t they just mean the same thing?
Yes and No.
ESG (Environmental, Social, Governance) is a term coined by the investment community. Responsible investors look at the long-term impacts of a company – on the environment, on its people and the wider community, and how well it is run. ESG frameworks (e.g. SASB, TCFD) can support investors to better understand an organisation’s non-financial risks.
Corporate responsibility (or Corporate Social Responsibility and sometimes called citizenship) usually refers to the organisation’s philosophy and is therefore measured by internal metrics.
Sustainability can refer to environmental sustainability or be more holistic, considering more generally how a business is fit for the future.
In truth, the definitions have become interchangeable. I’m not a fan of the labels and prefer to talk about operating a “responsible” or “ethical” business. Don’t get me wrong - this doesn’t mean any less focus on profit, but I firmly believe that profit and purpose are not mutually exclusive.
How does ESG help to attract investment?
If you are going through a funding round or looking to access investment, ESG is a critical component. Investors and lenders are growing more demanding about ESG criteria when making funding decisions.
Socially conscious investors still want to realise returns - but in a responsible way. Businesses that have a focus on ESG and a better understanding of non-financial risks are considered to be more future-proof than competitors, thus able to provide a long-term sustainable return.
Are there any legal requirements around ESG?
Yes. There is increasing legislation in this area. You might think that new requirements such as the EU Corporate Sustainability Reporting Directive (CSRD) only apply to large international corporates, but the reality is that those corporates will demand ESG data from the businesses in their supply chain, who will demand the same data from their own suppliers, and so on. Everyone in the commercial eco-system must demonstrate the work they are doing on carbon reduction, fair pay, social impact or other ESG priorities – they need to evidence that they are ethical and responsible.
If that’s still not enough of a driver, consider the UK Green Claims Code. The code sets out the government guidance for all businesses making environmental claims and aims to protect the rights of the consumer. It can be costly for any companies who break the code - fines might be imposed on businesses who do not meet the guidance, and who are seen to be “greenwashing”.
Compliance is one thing, but what about increasing revenue?
A business with good ESG credentials can generate more sales. Any business bidding for public sector contracts must have a Carbon Reduction Plan (PPN 06/21) and be able to evidence how it contributes to the UK target of achieving Net Zero by 2050.
The new UK Procurement Act comes into force on 25 February 2025. It will make it easier for SME businesses to bid for public sector contracts. The act requires contracting authorities to consider social value in tenders and take steps to minimise environmental impacts. Businesses who cannot effectively demonstrate their ESG credentials are at risk of losing bids or not having contracts renewed.
Likewise, customers are increasingly driven to make more ethical purchases. For direct-to-consumer brands there is plenty of evidence to show how customers are driven to make ethical choices, the rise in the B-Corp movement can be partly explained by this trend.
What about employees?
Employees want to work for a business that takes its responsibility to People and Planet seriously. They want to feel part of a Business for Good. “Purpose” is increasingly mentioned in recruitment advertising to attract talent to an organisation and keep it there. A recent report by Benevity claims 53% of employees are interested to work for a company with “impactful” CSR initiatives. Given the challenges of recruiting and retaining a talented workforce, doesn’t it make sense to appeal to future employees in this way?
In summary, perhaps the most important reason to embed ESG in the organisation is – quite simply – that it’s the right thing to do. However, the business case – higher returns, access to funding, customer appeal, employee retention, and brand reputation – is becoming even more compelling.
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