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Consumers, previously at the mercy of large corporations, are now the drivers of major changes in the ways in which companies approach their social interactions and public disclosures.
Our world is seeing a shift currently, spurred by a combination of environmental and social factors such as the COVID-19 pandemic, the drive towards the establishment of more equal societies, and the spotlight on climate change for example.
Investors and operations are now looking more cautiously at the economic decisions being made in the business world and how these are impacting our societies and our environment.
Where once the only driving factor of business was to make a healthy profit, companies are now shifting towards making decisions for a healthy triple bottom line - considering the health of the environment, their impact on people, and of course, on economic profits.
Increasing research and evidence is showing that those companies adopting this non-traditional and holistic approach are rewarded financially, along with the numerous societal and environmental benefits which come from good governance and positive impact decision-making.
There can be a tendency for companies to shy away from Environmental, Social and Governance (ESG) metrics and reporting due to a lack of understanding the risks, the perceived burden in gathering information, and dealing with missing or inaccurate information and what this may expose.
Due to recent shifts in consumer behavior however, the benefits of ESG monitoring and reporting are coming to the fore.
Consumers, previously at the mercy of large corporations, are now the drivers of major changes. They are more aware and informed than ever before regarding products and company supply chains, and are actively aligning their purchases with their belief systems.
Digital and social media has bridged the divide between the public and large corporations, bringing companies closer to their consumers, as well as increasing the likelihood of consumers exerting an influence on them.
An example is the move by Unilever to include the carbon footprint of their products within the next five years as part of their product labelling, on the back of public pressure to do so.
Information on any topic has become easily accessible at the click of a mouse, making it easier for a consumer to conduct their own research into a company and its processes, in-turn leading to more informed choices.
In this age of information, it has become important for a company to write its own story. This is where public disclosure comes in. A company can defend its reputation and write a positive story by disclosing detail around material issues to the public and investors.
Consumers and investors can then view this detail and determine whether a company is conducting itself in a responsible manner with regards to factors such as good governance, care for the community, and protecting the environment in a sustainable manner.
Social movements such as #BlackLivesMatter and #MeToo have shown how these can reflect in a large corporate’s boardroom agenda with its consumers and investors.
Consumers can use these issues in deciding whether to support a company that turns a blind eye to these types of matters, and ignorance on these issues carries the potential of altering investor and consumer sentiment overnight.
A company that can appropriately track these potential risks and show evidence of good governance on these pertinent topics, is well-placed to weather these storms.
Insomuch that consumers want to see accountability on issues that were previously swept under the carpet, investors too are now following these trends more closely due to the potential knock-on effect on the longevity and sustainability of companies and their profits.
IsoMetrix, a leading EHS and ESG software company, offers multiple solutions which make collecting, standardizing, and reporting ESG data easy.
These solutions can help set sustainability KPIs, measure performance based on the KPIs and monitor community feedback to help ensure social license to operate. Managers can assign actions and track them through to close out, promoting accountability and advancing progress towards ESG objectives.
As investors place time and resources into ESG efforts, investing in a technology platform which enables and facilitates these processes is paramount.