The End of the Beginning
Beginning in the 1990s, a silent revolution began to transform how business dealt with environmental, social, and governance (ESG) issues. Only two decades ago, concerns about climate change, water scarcity, exposure to corruption, working conditions in the supply chain, and gender equality were barely on the agenda of company executives. They were considered externalities or were dealt with through philanthropic approaches with little or no impact on the bottom line.
Today, however, such issues are high on the agenda of CEOs and boards across the globe, as their material relevance for influencing costs and revenues are increasingly recognized. Thousands of companies from all continents are now integrating, at various different stages, ESG considerations into strategies and operations. What had started off as a moral imperative and as an ad hoc response to crisis situations has evolved into a truly global social movement. It is a movement known by many labels such as “corporate social responsibility” (CSR) or “corporate sustainability,” but is bound by a singular recognition that in an interdependent world, long-term financial success goes hand-in-hand with social responsibility, environmental stewardship, and sound ethics. And the cast of many thousands of actors who are helping to shape its growth are increasingly known as Generation S, those who understand the power of sustainability to create positive change.
In a recent landmark study, the international certification body and classification society DNV GL analyzed the history and impact of this movement, using the UN Global Compact – the world’s largest corporate sustainability network – as its core reference point. The study concluded that although notable impact has already been achieved, the corporate sustainability movement has so far produced only incremental change towards the goals of sustainable and inclusive markets.
To achieve transformation, four interconnected pathways will need to unfold.