The terms sustainability, diversity & inclusion, responsible business practices, and net-zero emissions are just a few that have become part of our normal business lexicon, and for good reason in a decade of critical importance for balancing profit with people and planet. Each reflect the increased cultural and political interest in organizations’ impact on the environment and society, and are being measured by more organizations in tangible Environmental, Social and Governance (ESG) scores. Although ESG is not a new concept its importance is increasing, especially in industries such as financial services.

Heading up CWT’s global sales efforts in the financial services vertical I am engaged with individuals and teams managing travel programs for some of the largest organizations globally. Very few conversations occur that do not include some stage of an organizations’ ESG initiative.

Organizations have a wide range of stakeholders that have an interest in their approach and results in managing ESG, namely customers, investors, employees, government, and the public – each with the ability to have a significant impact on the success (favorable or unfavorable) of an organization. Organizations are rapidly reaching a watershed moment and have an important decision to make: Is ESG an initiative they must comply with or one where they can create a competitive advantage?

Assessing the risk factor

Most of an organizations’ key stakeholders share a common interest. They want to buy from, invest in, be employed by, support and - in general - be associated with organizations that demonstrate good environmental and social responsibility. At minimum organizations should understand and be complying with government, industry, and/or social standards for ESG. Non-compliance puts organizations at significant risk in the loss of customers, investors, and employees, in addition to potential regulation fines and poor public relations. Compliance can mitigate risk. However, it can be perceived as reactive. There is still risk with stakeholders that want more than a ‘tick-the-box' exercise. They want to see that organizations are ethical, authentic, and producing results.

According to a recent survey conducted by PwC of consumers and employees, 83% of consumers believe companies should be actively involved in creating ESG best practices and 86% of employees prefer to work for companies whose beliefs align with their own. 76% of consumers reported they would discontinue relationships with organizations that treated employees, communities, or the environment poorly.

Stakeholder vs. shareholder

In addition to risk based on their own organizations actions they have risk associated with the actions of 3rd parties they have elected to do business with. Buyers want these 3rd parties vetted for their actions, and those in the financial services space - as in all industries - have a responsibility to vet organizations that are part of their lending & investment strategies.

According to EcoVadis, an independent corporate social responsibility ratings agency, 91% of companies take sustainability into account when making purchasing decisions, and 85% of consumers are now more likely to purchase from a company with a reputation for sustainability or diversity & inclusion. 3rd parties can present a potential risk. However selecting the right partner can benefit an organizations’ ESG strategy and performance.

CWT provides travel management services to organizations and are market leaders in verticals including financial services. Corporate Social Responsibility is embedded in our organization. As with many of our clients, it is a key driver in not only how we do business but also who we partner with.

A signatory to the UN Global Compact and Science Based Targets Initiative, CWT has been recognized for the past five consecutive years (2017-2021 inclusive) by EcoVadis in the top category (and top 1% of businesses rated) for its responsible business practices.

We help clients reach their sustainability goals, create responsible travel choices and integrate sustainable travel into the overall performance of their program by investing in products that enable our customers to reach their sustainability goals to calculate, reduce and offset carbon emissions.

Making ESG a competitive advantage

A comprehensive ESG plan and good scores are important for the environment, society, governance, and good for business. According to Robin Nuttall, author of ‘Five ways that ESG Creates Value,’ ESG performance is improving capital cost by an estimated 10% and attributes this to the following factors:

  • Top line growth
  • Efficiencies that reduce cost
  • Relationships with regulators
  • Talent acquisition and retention
  • Investment optimization

To make ESG a competitive advantage requires commitment and resources, knowledge, planning, and execution.

Staying informed

ESG expectations seem to change daily, and the global nature and increased regulations only add to the complexity. Increased awareness and practical experience from developing and executing plans are not only a great opportunity for organizations to make ESG a competitive advantage, but also for individuals to develop a new skill set that will be a value to the organization and their personal and professional development. There are countless resources and articles available on this topic and I encourage anyone in a position to have an impact to make an investment in your organization and yourself by absorbing as much information as you can.

At the core of all ESG developments is a five-step process:

  1. Define ESG targets & Goals
  2. Assess your current state and develop a strategic plan
  3. Align with like-minded partners
  4. Action Implement proactive changes
  5. Report data & Insights

Just one in four CEOs rank ESG as a top-three priority, according to a new survey by the research firm Verdantix. I encourage all stakeholders to learn more about ESG and remain current. Understand your organizations position, and its impact on your current and future performance.

About CWT

CWT is a Business-to-Business-for-Employees (B2B4E) travel management platform. Companies and governments rely on us to keep their people connected – anywhere, anytime, anyhow – and, across six continents, we provide their employees with innovative technology and an efficient, safe, and secure travel experience.

Engage with us via LinkedIn, Facebook, Twitter and our Podcast.

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