According to Rivel Research Group, a firm that specializes in delivering actionable insight based on in-depth measurements of the investment community, ESG has six pillars: enhancement of market and accounting performance; lowering the cost of capital, a means to engage key shareholders; improving business reputation; fostering new revenue growth through product innovation; and aligning company and strategies with increasingly diverse constituents of the three-legged stool – customers, employees and shareholders.The strong focus on ESG is coming from significant institutional investors like BlackRock and Vanguard, who are taking a longer view of performance. These institutional investors are massively impactful in influencing the allocation of capital, share price and the election of board members. Now, in addition to the ongoing short-term quarterly reporting pressures, there are issues such as environmental risk mitigation and gender diversity that large investors believe can impact the bottom line. Investors have ongoing concerns for the future that need to be addressed. These issues include aligning business strategies for the greater good and being responsible to the business communities they serve.
Source: The Danger Of Not Embracing ESG