The E in ESG: IBM Study reveals that 70% of businesses view ESG as a revenue enabler
The E in ESG curates the week’s latest #sustainability news; focusing on regulatory developments, innovation, and the intersection of #environmental and organizational best practices.
This week's Newsletter includes:
The argument that ESG harms profitability is “more than a myth—it’s misinformation that leads to poor business decision-making,” according to a new study released by IBM , which found that more than 70% of executives view ESG as a revenue enabler, and that consumers increasingly focus on companies’ sustainability performance when making purchasing and employment decisions.
For the new study, The ESG ultimatum: Profit or perish, IBM ’s Institute for Business Value ( IBV ) analyzed results from a survey of more than 20,000 consumers about their attitudes toward sustainability and social responsibility, as well as a survey of 2,500 executives across 22 industries and 34 countries regarding their ESG strategy, approach, and operationalization, expected benefits and business objectives considerations. The study also segmented businesses according to ESG maturity to compare relative performance.
The executive survey indicated that ESG is a top priority for businesses, with 76% of respondents reporting that it is central to their business strategy, 72% approaching ESG as a revenue enabler rather than as a cost center, and 45% expecting ESG efforts to result in improved profitability. Jonathan Wright , Arun Biswas , Elisabeth Goos , Jacob Dencik , Andrea Hennemann
Regulators looking to squeeze out the “green lemons”
The current issues with corporate sustainability disclosure standards pose a familiar problem for markets: how to overcome information failures and allow prices to reflect the proxy value of assets?
More than half a century ago, Nobel Prize winning economist George Akerlof identified the problem of asymmetric information that stifled efficient market outcomes. Akerlof used the example of used car markets to illustrate asymmetric information: a market where few potential buyers possessed sufficient information to spot a defective used car, which he famously called lemons. He argued that, ultimately, regulations are needed to address information failures.
With the combination of expanding green markets and insufficient ESG data quality, the risk of “green lemons” has been growing for years: from phantom carbon offset credits to companies mismatching green pledges with daily practices.
Regulators across the world are making moves to address this. In the United States, the Securities Exchange Commission has proposed new rules setting out clear sustainability risk disclosure and reporting standards, while the US Federal Trade Commission has proposed new guidelines to ensure green claims–including claims related to carbon offsets–are truthful.
It’s morning in 2030. You’re home having breakfast – a plate of nasi lemak, with fried chicken wings cultivated from animal cells.
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Your artificial intelligence-enabled voice assistant reads the news to you. Like the rest of your home, it is powered by batteries which store and supply green energy all year round.
You head out to your car, which is electric, perhaps even self-driving.
Far-fetched? Such sustainable scenarios, driven by transformational and innovative technologies, are already in the works. It will be critical if the world is to survive into the future. For the planet to sustain itself, it needs to achieve the global goal of net-zero carbon emissions by 2050. Genevieve Chan
Regulations requiring sustainability disclosures are piling up, and a sweeping mandate from the EU looming large ‘just changes the whole game’ Eric Priante Martin
May 10: IBM Hybrid IT Support – lower cost and drive high availability and security across the data center
Tammy Farfan
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IBM , IBV , Cameron Art , Sarah Thuo , Brenda Harvey , Adam Lawrence , Lutz Schirrmeister , Nicholas Donofrio , Anup S. , Rim Elfallal , Diane W. , Maureen Kinard , Melissa Agner , Nick DiNapoli , Anthony Smajlaj , Galina Mishiev , Natalie Tuzin, MBA , John Hafner , Dianna Heard , Michael Mitterer , John Manasso , Cameron Ravanbach , PJ Catalano , Jeffrey Torres , Guy Perera , Amira Alfa , Lisa V. Johnson , Morris Selby , Carson V. Heady , Kristen Berntsen , Toni Pepper , Kareem Yusuf Ph.D , Xbox Game Studios Publishing Chris Workman , Alberto Amesquita , Sean Bunoski , Leslie Korhan , Wendy Simoncelli , Brad Barton , Ed Corno , Arup Atarthi , Andrew Lehman , Ed Weilage , Tammy Ward , Tammy Farfan , Steve Goetz , Matthew (Matt) Broomhall , Laura Scott , Mohammed Alo DO, FACC , Frank Luksic , Bina Hallman