And it’s not just me saying that. I have just read a report called “From the Stockholder to the Stakeholder”. Having reviewed 190 different studies, they conclude that around 90% of these studies concur. They use a term – ESG (Environmental, Social and Governance). For me, if a company cares for its environment, its social impact (internal and external) and is properly governed, it is heartful. The report summarises studies that show operational performance is higher, borrowing costs are lower and share prices are increased for heartful businesses.
The studies show that good environmental practices translate into a competitive advantage and better performance – as do good social policies. A study of the ‘100 Best Companies to Work For’ show that their returns are 2.1 points above their industry benchmarks. I could go on and on quoting positive statistics.
Sadly, the reverse holds true also. Ignoring your responsibilities and not taking care of your employees and the planet will cost you in long term shareholder value. BP is an example of this and is cited in the report. Post the Deepwater Horizon their share price under-performed competitors by 60%. And their cost of borrowing went up.
Furthermore, while 81% of CEO’s surveyed by Accenture thought that sustainably was important to consumer buying decisions, only 33% think “business is making sufficient efforts to address global sustainability issues”. A very encouraging sign as my biggest fear is complacency – “Oh yes. We ARE doing that…” There is a contra to this in that 79% feel pressure to deliver financial results in two years or less. This impacts their ability to take good long term decisions – something that is critical to the issue faced by businesses in 2015.
So if it is so clear that it does work, why are so few companies truly embracing this better way of being? I’d love to hear your views. Please email me
If you would like to read this report in full, please click here to download
From the Stockholder to the Stakeholder.
Heart in Business Limited