The fourth of 6 blog posts from inside by Ben Brown and Terry Gips from the Alliance for Sustainability (www.afors.org)
Making the environmentally, socially conscious choice is increasingly the right choice financially. Historically, environmentally conscious companies often sacrificed profits by having higher costs, charging more, and losing sales as a result. That’s not necessarily true any longer. Changing consumer preferences, coupled with lowered operational costs, allows these businesses to compete with their non-sustainable competitors. The result is that sustainability is now a comparable – if not better – business strategy.
Nick McCoy of Whipstitch Capital highlighted several striking investment industry trends. In 2020, ESG tilted indexes outperformed general market indexes by about 10%, which means the average stocks of companies meeting given sustainability criteria performed better than those that didn’t. From 2019 to 2020, money flowing into ESG funds more than doubled, continuing the meteoric growth it’s seen since the early 2010s.
Investment money is also a significantly larger share of funding towards sustainability and JEDI solutions than taxes or donations. While the latter are methods often associated with progressing in sustainability and JEDI areas, the reality is that the biggest monetary source of change in these areas is the money going into sustainable business via investment, which also means businesses hold a crucial role in working towards a more sustainable world. As investors increasingly concern themselves with ESG principles – not just because it’s the right thing to do – but because being conscious of those things can help make more money – sustainable businesses are primed to continue to grow and thrive both on an individual level and as an industry.
This isn’t just an investment phenomenon either – it lies in the daily decisions of the biggest companies in the country. Jay Curly, the Global Head of Integrated Marketing for Ben and Jerry’s, talked about how the company consistently worked social and environmental justice issues into their marketing campaigns, from special ice cream flavors to social media campaigns.
Questions came up about losing customers who opposed the messages behind their campaigns. Jay responded by noting that it’s not always about the marginal customer, but about building a brand that people care about, people respect, and people will actively choose to purchase from in the long run because it shares their values. They make up for the loss of fringe customers in the long run by adding other customers and bringing in repeated business.
Statistically, it works. While being the largest activists about social justice issues on social media, in stores, etc., Ben and Jerry’s remains number one in ice cream sales in the United States. So just ask Jay – being good works.
Next: Corporate social and environmental responsibility and transparency matters to consumers