Why Now Is The Time To Invest In ESG And Sustainable Tech

A recent documentary produced by the BBC’s Natural History Unit called?The Year Earth Changed ?opens with a series of stunning visuals. But instead of only high-definition shots of nature or exotic species in the wild, the film pans to images of landmark locations in global cities sans their characteristic crowds. This is the world soon after 2020’s lockdowns.

Minutes into its stark opening, and seconds after the cameras move away from incredible shots of a leopard sauntering by on city streets, you hear David Attenborough’s distinctive theatrical voice saying, “If we choose... we can transform the health of the planet... for all.”

Aiming to live more sustainably until now has been the preserve of environmentalists and natural history buffs like Attenborough. But it is crossing over into the business ecosystem in ways that we have not seen before. The onset and consequences of Covid-19 have made it amply clear that our species can no longer afford to live the way it has, with scant disregard for the planet and scores of species for whom it is also home.

Changing Mental Models

Businesses, governments, financial services organizations and regulatory bodies acknowledge the need to prioritize a change in their mental models. They realize that the only way into the future is by paying attention to how business is done, with sustainable outcomes in mind for all three Ps: people, planet and profit.

This shift is already making its effects felt in the financial ecosystem. Consider, for example, how environmental, social and governance (ESG) valuation in financial services and capital markets surged in 2020. ESG bond volumes reached over?$489 billion , a record high. And research by a UK-based?investment management company ?has disclosed that stocks with higher ESG ratings had better returns in nearly every month of the first three quarters of 2020.

Earlier this year, some of the world’s leading banks added their weight to this shift by pledging their commitment to green finance. JPMorgan Chase, for example, announced its decision to finance more than?$2.5 trillion ?over the coming 10 years to accelerate climate action and promote sustainable development. The Bank of America pledged?$1.5 trillion ?toward "sustainable finance mobilization" by 2030, while Citi announced its commitment to achieving a?$1 trillion ?green finance goal also by 2030.

Incentivizing Impactful Living

These announcements are all having a significant impact on banks and their willingness to embrace ESG. New financial models and products are continuously being created, tested and taken to market. Wealth managers are paying closer attention to ESG funds. Retail banks are introducing a larger variety of sustainable banking products, including green home-improvement loans. And bank customers now have a wider variety of sustainable investment and banking products to choose from, right from ESG-linked bonds to funds and assets.

These shifts are, in turn, affecting businesses. Companies are waking up to the need more than ever to nurture their brands with profit and purpose. Even before the onset of the pandemic,?Bank of America Merrill Lynch , for example, discovered that companies with a better ESG record than their competitors had higher returns, were more likely to become "high-quality stocks" and were less likely to undergo substantial price declines or go kaput.

Embracing The Change Customers Want

A recent BCG?survey ?looked at how Covid-19 has changed consumer attitudes toward environmental issues worldwide.

It found up to 90% of those surveyed saying they were "equally or more concerned" about these issues after Covid-19, and nearly 95% said they thought "personal actions" (including purchase preferences) could help lower "unsustainable waste, tackle climate change, and protect wildlife and biodiversity."??

Companies must take these signs seriously and align their brands, operations and culture to better fit consumer expectations. One of the ways they can do this well is by adopting sustainable or green tech — or through the use of technology to make products and services more planet- and people-friendly.

Driving Sustainability Through Emerging Tech

Several emerging technologies lend themselves well to enhancing sustainability. This includes the internet of things (IoT). From monitoring fish farms remotely and driving aquaculture efficiencies to improving supply chain efficiency by providing importers, exporters and manufacturers with real-time data, IoT’s?ability ?to monitor means it can help optimize resource deployment.?

IoT also lends itself well to businesses in the energy space. It can help reduce energy consumption and lower carbon emissions with smart meters that track usage and support more sustainable means and modes of transportation.

Similarly, blockchain and quantum computing can also help businesses improve their sustainable business models. While the former can help by boosting transparency and efficiency, the latter can help dramatically cut down power consumption.

The move toward living a more mindful and sustainable life is here to stay. It is up to businesses to seize the moment and ensure they are on track to meet their ESG commitments to delight their customers. Customers and employees want to be associated with brands that walk the talk when it comes to sustainability. The pandemic speeded up the digital transformation journey for many businesses and pushed us to go digital native. Businesses need to also think of how they can be sustainable and bring in eco-friendly practices into every level of their operations. It must become a core business mantra that everyone, from the CEO and CTO to new employees, is aligned with.

For this to happen, there needs to be a clear analysis and in-depth understanding of the state of affairs and requirements of stakeholders at each level. Note a few areas where you can run pilot projects and develop plans based on those findings. It will be more effective than an across-the-board change, as it will help convince those who might be resistant to change of its importance. This will also help you discover what kind of ESG program best fits your organization's needs.

This point of view article originally published on?Forbes.com .?Forbes, the No. 1 business news source in the world, is among the most trusted resources for senior business executives, providing them with the real-time reporting, uncompromising commentary, concise analysis, relevant tools and community they need to succeed at work, profit from investing and have fun with the rewards of winning. Forbes reaches an audience of 931,0558 for their print edition, and 3,600,000 for their online edition.

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