The Sustainability Edge: Business Benefits of Embracing ESG

Corporate sustainability today is grounded in a conscious and conscientious approach to capitalism—a belief system positing that when value is created to share with all stakeholders, more value is generated over the long term. The rise of sustainability as a strategic imperative — and the integration of environmental, social and governance (ESG) factors into decision-making — are as much about the demands of the business as they are about the demands of society and the desire to make a positive impact on the world. 

Addressing the interconnected challenges of our global society is a shared responsibility and an opportunity to drive improved environmental, social and business outcomes. Evidence shows that integrating ESG into a company’s core business strategy ensures the organization is more resilient and better positioned to adapt to change. Leading and governing with an ESG mindset reprioritizes long-term value creation and recognizes that purpose is the path to sustained profits and success.

Here are five ways ESG creates long-term business value:


1. Attract talent and improve employee loyalty

People want to work for organizations whose values align with their own. Career decisions are increasingly values-based, with purpose front and center for many employees. As the war for talent hits a fever pitch, companies with strong ESG profiles are likely to have greater success with recruitment and retention, especially with younger generations. A survey from the Society of Human Resource Management found that 60% of executives at companies with ESG strategies reported that their ESG commitments positively impacted retention and 64% reported that their ESG commitments positively impacted recruitment.


2. Increase customer loyalty and safeguard brand integrity

Customers vote with their wallets and research has shown they are more likely to support sustainable businesses. In fact, 71% of consumers indicated they plan to make more sustainable purchasing decisions, according to a recent report. Additionally, 64% of Americans also say they would be willing to pay more for a sustainable product, and 62% of U.S. and UK consumers say they would join a customer loyalty program if they knew the rewards contributed to social causes they cared about. 

3. Deliver greater shareholder returns

The savviest investors know it’s the long game that matters. Short-term measures to meet quarterly earnings targets that result in environmental or social degradation or come at the expense of investment in future growth will harm performance over time. Shareholders’ economic interests are better served by a commitment to ESG and a long-term view of value creation that takes broad stakeholders into account. Companies that proactively embrace ESG principles are more likely to outperform their peers on every performane metric. Organizations that embed ESG initiatives into their operational and growth strategies are likely to attract more interest from investors and improve their overall financial performance.

4. Drive higher profitability

As companies shift their focus away from optimizing for short-term profits, profitability actually increases over the long term. There may be short-term cost increases incurred when shifting to sustainable sourcing, investing in research and development, or raising pay, but those costs are offset by the advantages they may bring. Stronger ESG practices correlate to higher margins. Adopting ESG measures can save costs by using resources more efficiently, lowering overhead expenses and reducing waste.

5. Mitigate risk and build resilience

Companies with strong ESG practices are not only more resilient in times of adversity, they also face fewer material adverse events to begin with. By proactively identifying and addressing ESG-related threats, businesses can reduce incidence risk. A Wharton study found that strong ESG performers have a much lower incidence rate of fraud, litigation, customer attrition and revenue shortfalls. Company executives are responding accordingly. In the 2024 BDO ESG Risk & ROI Survey, 53% of CFOs say they have embedded ESG principles into their core business strategy or are actively working on it.