Meanwhile, they face ever louder calls  to take responsibility for the impact their strategic decisions and policies have on employees, customers, the  communities in which they operate and  the environment we all share.

Environmental, Social and Governance  (ESG) issues have never been so  prominent. They influence the lending  criteria of banks, investment sentiment of  corporate financiers, spending decisions  of customers and the ability to hire the  most talented staff.

Covid has accelerated adoption of ESG principles … and the positive impact  on companies strongly committed to  pursuing high standards in ESG has been dramatic, as this study by Moore Global  reveals.

Moore Global commissioned the Centre  for Business and Economic Research  (Cebr) to investigate the rate of adoption of ESG principles in key economic areas –  the United States, Europe and Australia.  Cebr also analysed bottom line benefits  recognised among the 1,262 large firms  we surveyed.

Businesses placing greater emphasis  on ESG over the last three years have  seen revenues increase by almost 10%  in that time. This compares to revenue  growth of just 4.5% for businesses that  demonstrated a comparatively lower  commitment to ESG.

Across our sample countries, this  revenue uplift is estimated at $3.1 trillion for businesses placing greater  importance on ESG.

That is equivalent to a $45 million uplift for each large business.

Companies placing greater emphasis on ESG over the last three years have seen income rise by almost 10% – more than double the rate of those companies that have not given it as much prominence.

The rate of profit growth among keen ESG adopters slightly lagged income growth, at 9.1% versus almost 10%. However, it still represented significant outperformance. Their profit growth over three years was almost three times greater than ESG laggards which achieved an uplift of 3.7%.

Revenues and profits are related to the strength of the underlying business and one key metric for most companies is the level of repeat business from customers. Some 83% of firms placing greater importance on ESG principles reported that their actions had improved customer retention.

Of course, committing to high ESG standards does not come without costs and a majority of business leaders said they had to  commit financial resources in order to take full advantage of the potential ESG dividend. This may explain the slight differential between revenue and profit growth. 

While the overwhelming majority of companies had to invest to improve their ESG performance, the costs appear to be offset by improved access to sources of finance. Some 84% reported that their ability to attract external investment had improved slightly or significantly.

ESG principles are widespread in corporate strategy documents, and more than half (51%) of large firms now have a dedicated ESG job role. 

The US has a higher share of ESG jobs than other countries while Australian companies, operating in an economy heavily reliant on natural resources, are the most engaged in putting ESG principles in to practice. 

However, as this study proves, ESG is not about making sweeping statements in corporate brochures or tick-box “benchmarking” surveys. 

Companies that have diversity of thought among their leadership teams and embrace ideas from traditionally underrepresented populations are able to adapt to market changes quicker – and are more profitable.

For companies that are ESG laggards, the future is less certain: one of sluggish growth, continued staff shortages and market share ebbing away to more committed competitors.