Inside the Strategy Room

177. How ESG can enhance profitable growth

Oct 3, 2023

This podcast explores how integrating ESG priorities into growth strategies can lead to financial success. It discusses the importance of fundamentals, growth, and margins in driving value. The emphasis on different aspects of ESG varies across industries. The integration of ESG practices into business innovation is highlighted, along with the challenges of communication and aligning strategies. It also explores business model transformation and ESG alignment in various industries. The sources of growth for companies, strategic considerations, and opportunities to make a positive impact are discussed.

37:15

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Quick takeaways

Integrating ESG priorities into growth strategies can lead to outperformance compared to peers in terms of financial success.

Different industries emphasize different aspects of ESG, such as the environmental aspect for carbon-intensive industries and community engagement for mining industries.

Deep dives

ESG Can Enhance Profitable Growth

Investments in ESG can accelerate profitable growth and deliver higher shareholder returns. Integrating ESG into the core strategy and innovating ESG offerings are key. The research shows that companies with a strong core strategy, innovative ESG offerings, and a programmatic M&A approach outperform their peers. Communicating and reporting transparently on ESG efforts, as well as embedding strategic priorities throughout the organization, are crucial. The intersection of growth, profitability, and ESG outperformance leads to 7% excess total returns to shareholders above peers.

Introduction

2min

Accelerating Profitable Growth through ESG Investments

13min

Variation of ESG Focus by Industry

2min

Integrating ESG Practices into Business Innovation

14min

Redefining Business Models and ESG Shifts Across Industries

2min

Exploring Sources of Growth and Personal Takeaways

2min

Hope for Companies to Do Good and Outperform

3min

Many executives believe making growth sustainable and inclusive requires inscrutable trade-offs, forgoing revenue and profit for the sake of society and the planet. That is not always the case. Our new analysis indicates financially successful companies that integrate environmental, social, and corporate governance (ESG) priorities into their growth strategies outperform their peers—provided they also outperform on the fundamentals. The message is clear: not only can you do well while doing good—you can do better.

Our guests are Rebecca Doherty, Claudia Kampel, and Werner Rehm.

Related insights:

The triple play: Growth, profit and sustainability

Five ways that ESG creates value