Some 90% of companies either have or are developing a formal strategy to manage corporate environmental, social, and governance practices, according to a Morningstar Sustainalytics survey of 556 corporate social responsibility and sustainability professionals. Corporate sustainability teams are increasingly at the center of important business discussions, based on an intensifying stakeholder focus on ESG issues, expanding investor expectations, and shifting approaches to climate change and regulation.
That means good things for shareholders. “It is increasingly apparent that material environmental and social factors play a role in a company’s performance and shareholder returns,” says Alyssa Stankiewicz, associate director of sustainability research at Morningstar. “For example, if a company’s supply chain is prone to increasingly frequent severe weather events, which is the case in countless regions across the world these days, it’s prudent to shore up protections and infrastructure to ensure the business can continue operating. If a company is proactive about treating its workforce well, it won’t suffer as much as competitors from turnover, and it will save on costs like hiring and training new employees.”