On Wednesday, I got to experience what it was like to be an employee of a 55,000 person company that has announced an ambitious 12 year ESG strategy and goals. Cox Enterprises, a telecommunications, automotive and media firm, is calling the strategy 34 by 2034: Act to Impact, with an overarching vision of impacting 34 million lives by 2034 and six pillars for how to do that. In the environmental sustainability pillar, this strategy prompted them to accelerate their existing carbon and water neutrality goals by 10 years. They are doing a 10 stop employee tour to educate their employees about the goals, why they matter, how progress will be measured and what they can each do to take part. WeSpire was invited to attend as our app powers their ESG employee engagement efforts.
It was an incredibly fun and well-produced event, but most importantly, people seemed genuinely interested in the goals and what they could do. On a “Make Your Mark” wall, hundreds of employees wrote specifically what they would do to participate. In a video booth, people recorded videos of why these goals and impact was important to them. These testimonials are powerful reminders that so many people want to do something to support climate, underserved communities, and racial justice and equity. When they are able to do that, particularly as part of their job, they are grateful and yes, very proud to be part of that company. WeSpire’s research has shown that people who believe their company is making a strong positive impact in the world are 45 percentage points less likely to leave their roles.
The link between ESG and business performance
Better employee retention is just one reason to have ambitious ESG goals. George Serafeim at Harvard has done incredible research looking at the connections between ESG and business performance. He finds a real difference in outcomes depending on the entire mentality around ESG. “To date, most companies have been treating ESG efforts like a cell phone case—something added for protection (in this case, protection of the firm’s reputation). Corporate leaders need to replace this mentality with an ambitious and differentiated ESG strategy if they want to see real financial dividends.”
Better reputation, better culture metrics and better financial performance should be enough reasons to embrace ambitious ESG goals, but a fourth factor is emerging: resilience. ESG focused funds outperformed during the pandemic. The top four of five high impact risks laid out in the World Economic Forum 2020 risk report are social and environmental in nature. The top five in terms of likelihood are environmental. As an author from the Rockefeller Foundation laid out, “Simply put, it is increasingly clear that investors can no longer outrun or ignore social and environmental problems. All evidence points to continued business and financial disruption in the years ahead.” But she also argues that current ESG frameworks don’t do enough to measure a firm’s resilience, or lack thereof.
While it may feel like every company is embracing ESG, in reality, only a small number have set ambitious science-based targets so far. That will change, thanks to a combination of policy, new and better reporting requirements, and investor expectations. However, no one mandates being ambitious. I’ve certainly heard companies say “we will only set ESG goals we know we can hit.” That’s better than no goals, but I think it severely limits the strategic opportunity of ESG, particularly around innovation, culture change and resilience. So let’s encourage those organizations we are part of to think bigger. To be ambitious. To accelerate timeframes. As Virgil said, fortune favors the bold.