What are Different Stakeholder's Views on ESG?

What are different stakeholders’ views on ESG?

22 December 2022

ESG is a concept filtering into all types of business, from fashion to food, tech to finance. If you want your company to be long lasting and attractive to different stakeholders, it’s important to improve and show your ESG credentials. This article takes a look at ESG attitudes from consumers, employees and investors, to see how much they care about sustainability factors, and which issues stand out to them the most.

Consumers

The latest report by Drapers highlights sustainability trends amongst consumers, showing the importance that shoppers place on sustainability. Out of those surveyed, 77% consider sustainability when buying fashion, and 36% stopped buying from brands for ethical reasons.

Consumers are interested in a range of ESG issues. Specifically, the study highlights their concern for fair wages for workers throughout the supply chain and sustainable methods of packaging and delivery. In fact, 59% cited fair pay for workers as the most important factor in ESG. Additionally, 64% are more likely to buy from companies with sustainable packaging and 63% are more likely to buy from companies with sustainable delivery. Other issues that are important to consumers include sustainability of raw materials, as well as circularity and recyclability of materials. Shoppers also believe that brands have a key responsibility in the sustainability movement with 45% stating that retailers should guide the sustainability transition rather than consumers or government.

Trust regarding brands’ sustainability claims was a significant issue for shoppers, with 71% not trusting brands who say they are sustainable. The good news is that sustainability certification can help, since 61% are more likely to buy a product or service if it is certified by a recognised sustainability authority. Certification will also help to communicate ESG credentials to consumers, with 57% of consumers stating that they research sustainability credentials of fashion brands before buying from them.

Employees

It is not only consumers whom ESG affects, it also shapes employees’ attitudes towards their work and the type of jobs that they choose. Having strong ESG credentials can attract talent by aligning with potential employees’ values, since 86% of employees prefer to work for companies that care about the same issues as them. This is particularly important as millennials and Gen Z generations become a larger proportion of the workforce because they are more concerned about sustainability than older generations.

Not only do strong ESG credentials help attract talent, they also help retain it and boost productivity by increasing satisfaction levels. People work better when they have a sense of purpose, which ESG can often provide. When workers are happy and productive, it also has the knock-on effect of increased shareholder returns, with studies finding 2.3% - 3.8% higher annual stock returns in companies where people enjoyed working.

Investors

Additionally, investors are becoming increasingly interested in ESG and in 2020, $51 billion dollars was paid into ESG-impact funds. Almost 80% of investors say that ESG factors are important in their investment decisions, and 50% consider divesting from companies that do not have sufficient ESG strategies. When companies have proof of ESG achievements, it acts as evidence to investors that they are less risky and more prepared for future uncertainties. In some cases, investors are even willing to prioritise strong ESG ratings over higher returns.

Climate change seems to be the most important ESG aspect for investors, with 53% selecting it as the most significant factor in their investment choices. Investors are also worried about the financial risk of climate change, with 78% being concerned by the affect that climate change has on the global economy.

The findings in this article show that ESG is a trend that organisations cannot afford to ignore. Whether it is through increasing consumer trust, attracting talent, boosting employee productivity or proving resilience to investors, it is clear that having evidence of strong ESG credentials is vital. If you are a member, then you are already doing a great job to improve and showcase your ESG credentials! Have you thought about embedding your ESGmark stamp in email signatures, social media posts or product packaging to show stakeholders proof of your strong sustainability commitments? If you are thinking about joining as a member, ESGmark can help to improve and communicate your ESG credentials. Get in touch with info@esgmark.co.uk to speak to our team.