48 (143) 2021

Green Transformation

‘Business for Good’ is becoming more than just a buzzword

By Tom Nutt, Head of Corporate, Grayling UK & Europe
Header grayling tom nutt

‘Business for Good’ policies have risen rapidly up the corporate agenda in the past decade, shifting from a nice-to-have marketing tool to an absolute essential of any major business’s corporate make-up.
The past 12 months have heightened the focus on these policies. The positive social impact of business has been a key barometer by which companies have been judged by customers and the public during the pandemic, and businesses are now looking to incorporate positive social value policies into longer-term business goals. Environmental, Social and Corporate Governance (ESG) strategies are the means of achieving this.

At Grayling, we recently conducted a study of large UK and European businesses (with 250+ employees) and found that nearly half (45%) expect ESG issues to be more important in 2021 than the previous year, while another 28% said they would be more important than in most previous years. As a result of the pandemic, 82% also said that the decisions and policies they implement on ESG would be more important than in previous years[1].

While these policies require substantial dedicated resource, the rewards are significant: a more engaged and diverse workforce, a more efficient business, greater investment opportunities and a raised profile as an organisation that can help define the global economic recovery. It is therefore the perfect time to begin making the positive changes that societies are eager to embrace.

Business for Good is now more important than ever

2020 was a year in which decades of change took place in the space of 12 months, with the pandemic completely upending our ways of working, healthcare, government policy and the overall patterns of daily life.

But this change has also brought progress. In the space of 12 months, the pharmaceutical sector has designed and tested multiple never-before-seen vaccines, in some cases for no profit of their own, creating almost unmeasurable economic and social value. This has changed the scale of ambition for firms as they look to make 'business for good' a reality.

Consumer attitudes are also now driving the focus on business as a force for good. Last year, UK consumers spent a record £41 billion on goods and services that were billed as ethical or environmentally friendly, according to a Co-op report 20 Years of Ethical Consumerism. The average spend on ethical purchases per household has grown from £202 a year in 1999 to £1,278 in 2018, or fourfold in real terms after inflation.

Business under green pressure

The pandemic has now intensified corporate focus on the environmental challenges facing society, and with the COP26 UN Climate Change Conference to be held in Glasgow in November 2021, the focus on environmental policy will increase further.

These pressures are heightening the conversation around climate change and forcing governments and businesses to act. Investors are increasingly demanding robust ESG reporting requirements, and it is no surprise that the number of references to ESG in investor calls has risen by 800% since 2017[2]. The global climate strike driven by young people around the world and led by the tireless Greta Thunberg has further galvanised global support for climate action.

Business leaders now know action on climate change is a necessity. Encouragingly, our recent research showed that 70% of business leaders agreed that “alongside making a profit, businesses also have a collective responsibility to the societies they operate in.” However, 29% UK and European business decision-makers expect the continued focus on Covid-19 will stifle conversations on sustainability during 2021, while 14% feel that customers, consumers or governments are demanding quicker action than is possible at present[3].  

To overcome these obstacles, business leaders must now set expansive and ambitious visions on ESG and rouse support around them. Investors are seeking more than quarterly revenue targets and looking towards plans that create impact and transform industries in innovative and future-facing ways – and by necessity, this means environmentally sustainable ones.

What New Collectivism means for business

Our recent New Collectivism study highlights the changing attitudes of business leaders from the ‘profit-only’ approach of the 1970s and ‘80s, up to the present day, where businesses are increasingly recognising their wider role in society. The report showed that 63% of senior leaders now agree that businesses have a collective responsibility to the societies in which they operate. Of those that agreed with the idea of collective responsibility, 94% say it is an important factor in the future social prosperity of the countries in which these businesses operate, and 85% say it was important for the future prosperity of their business.

Businesses are now reassessing the wider role of their organisations in society and moving towards a ‘new collectivism’, where business will function as part of multiple, interdependent and mutually-beneficial communities This is being driven by three things – concern around climate change and the environment; social unrest around the world and the simple fact that sustainable business is good business.

It is an understatement to say that the last year has been a momentous one for business. The pandemic has sped up and added greater urgency to previously slow-burning trends, and I expect this sense of urgency to be on display at COP26 this year, which is undoubtedly the most important UN Climate Change conference ever.

For more information on The New Collectivism and to download the report, please visit here

[1]      Study commissioned by global communications company Grayling; conducted of 500 senior business decision makers in international businesses across micro (1-9 employees, small (10-49 employees), medium (50-249 employees) and large corporations (250+ employees). Field study conducted 3-8 Feb 2021 by Opinium Research.
[2]      https://www.wsj.com/articles/esg-metrics-help-cfos-attract-new-investors-reduce-costs-11612780321
[3]     1  3 The New Collectivism, a study commissioned by Grayling; conducted of 500 senior business decision makers in international businesses across micro (1-9 employees, small (10-49 employees), medium (50-249 employees) and large corporations (250+ employees). Field study conducted 3-8 Feb 2021 by Opinium Research.

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