There is no bigger wake-up call for companies than the call from investors. More than ever before,  investors are expecting to make environmental and social and governance (ESG)  a top priority.

This shouldn’t come as a surprise. Now that the world is shifting its focus on the post- Covid-19 economic recovery, investors are looking toward the businesses that are already adapting their processes by relocating activities online and making their supply chains (customers, suppliers and employees) more efficient and resilient with sourcing closer to home.

Corporate focus on ESG performance and achievements has grown more than fivefold in less than 10 years (from 20 percent in 2011 to a staggering 86 percent in 2019). This is likely to grow at an even faster rate.

In the past, the majority of sustainability professionals didn’t get invited to meet with the investor relations (IR) team and probably couldn’t tell you where in their building the Bloomberg terminal sat. Whether it’s the last couple letters from BlackRock’s Larry Fink or an increasing awareness on the environmental and social data that sustainability teams have been publishing; either way their input and expertise now counts. A lot.

As the importance of ESG has also grown in private equity and venture capital markets, these firms are placing new demands on their portfolio companies to have an internal sustainability expert. These ESG specialists are charged with setting up the systems to track, analyze monitor data, also creating risk appraisal tools, performance evaluation criteria and monitoring and reporting frameworks. That’s a lot on anyone’s plate.

One thing is clear however: more investors are reallocating their holdings to ESG-indexed funds; that impact will significantly influence corporate strategy in the years to come. 

In 2020 sustainability professionals will need to learn and adapt if they want to survive. Be warned: investor pressure is on…

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