Staying competitive is fundamental to the survival of any business. But, these days, even that isn’t enough. Economic criteria alone cannot and should not be the sole area of focus any more. Given the climate threat and the current socio-political context, things like sustainability and other ESG (Environmental, Social and Governance) criteria must play a key role in markets.

Sustainability and other development goals in the spotlight

The public, investors and markets alike are all looking closely at how organisations operate far beyond their balance sheets. Their contribution to the common good is beginning to be one aspect that people are considering before doing business with them, whether it’s a major capital injection or simply deciding to buy their goods and services in a shop or online. Global development and ensuring everyone around the world can live a dignified life while enjoying all their rights and freedoms isn’t just an empty promise anymore, and economic leaders know it.

Above all, because the public have their eyes open more than ever before, especially when it comes to aspects related to sustainability, given all we now know about the harmful effects of global warming, for example. While the road ahead remains a long one, that also means the space in which organisations can make a big difference is vast. According to a special report from the UN General Assembly, currently just 15% of their Sustainable Development Goals (SDGs) have been achieved. At this point, 2030 is looking very far off indeed.

Beyond reputation: a business that cares is a business that succeeds

Ambitious and far-reaching targets, such as the SDGs, are normally associated with political or government decisions taken by individual states or super states. But, more and more often, the private sector is linking growth strategies with goals on these issues, as they seek to care for the environment and all inhabitants of our planet, in every aspect of their lives. If an organisation is empirically seen as responsible and concerned about their impacts and behaviours, it’s far easier for them to take on a leadership role at the same time.

Alongside the obvious reputational benefits of acting responsibly, leading by example can actually be a differentiating factor. What Nobel laureate Jean Tirole defined in 2014 as “economics for the common good” begins to crystallise in global corporate mentalities, indicating a shift in the trend towards more responsible behaviours, both when producing goods and services, as well as through the contributions and positive impact they can have on the societies in which they operate. 

Trust is another ESG component to bear in mind

While it’s often hard to pin down, given there’s no standardised scale of measurement, it’s clear that there’s a new “global awareness”, a general trend towards companies being more accountable not only for what they do, but for the ways they go about it. In this sense, one of the newer ESG criteria that’s taking on more prominence is trust.

Markets aren’t just asking what goods and services are being produced, and what needs are being covered, but also which countries are the production centres found in? Are human rights being respected? Does this company have a gender equality policy? Are they a family-friendly workplace? Alongside varying levels of trust that can be derived from the answers to these questions, the amount of trust and confidence organisations instil through their digitalisation processes is also very important.  Not just because of the quality of these processes, but also because of the resources they require, the clean energies they involve, and the environmental footprint that the technology transition involves.