Still believe ESG is a waste of time? 90% executives report early, significant returns, says Infosys

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Still believe ESG is a waste of time? 90% executives report early, significant returns, says Infosys
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In just about every action taken on this planet, there comprise revolutionary initiators and the followers. In climate action, both groups of people are just as important. Due to the urgent and pervasive nature of the problem, there is no ‘opt-in’ to the climate solution; you must take the necessary steps to ensure your corporate processes don’t lay waste to the planet.
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Tragically, however, several hurdles remain before companies can make the necessary environmental, social and governance (ESG) transition. Of course, the primary constraint is whether such sustainable initiatives can rack up a profit margin — something most struggle with. However, the Indian-born company Infosys has shown this doesn’t have to remain a pipe dream.

In their recent report, titled ‘ESG Redefined: From Compliance to Value Creation’, they state that 90% of global business executives mentioned that their ESG spending led to at least moderate or significant returns. In addition, two-thirds of them reaped these benefits within just three years; not the most immediate results, but definitely not an unimaginably high figure either.

So what’s the problem here? It’s the same old issue. As Mohit Joshi, President, Financial Services & Healthcare/Life Sciences businesses, explains, “You have to spend money to make money,” which significantly bottlenecks smaller companies that barely have enough resources to keep themselves afloat, much less even think of a green transition.

This is tragic because the report clearly outlines that ESG is a proven moneymaker, where a 10% increase in ESG could easily correspond to a 1% profit growth. Notably, most companies barely share ESG data through the supply chain, with only 16% of companies having renegotiated contracts when ESG targets weren’t met.

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This is obviously a glaring problem because carbon neutrality will only come to fruition once all the players are actually held accountable. This indicates a clear need for leadership and appropriate incentivisation within corporate supply chains.

“Although 90% of respondents in our study say ESG gives ROI, there is still a lag in applying strategy to ESG as it is done for other parts of their businesses,” notes Joshi. “Companies must shift views to recognise ESG as a value creator to reap the financial benefits of ESG investments and to achieve maximum impact in creating a better, more sustainable world.”

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