Beyond compliance: How your ESG strategy can supercharge your business

In the last five years, Environmental Social and Governance (ESG) controversies destroyed more than $500bn in market capitalization. That is one startling fact contained in a new PAC white paper sponsored by Fujitsu. On this evidence alone, ESG is a phenomenon that companies need to address strategically, tactically, and operationally.

The paper argues that, while ESG creates new requirements, it is also an opportunity to create new value, drive efficiency, and maximize brand value. Companies can reframe their sustainability agendas as growth engines. And the paper highlights four use cases where that is already happening.

ESG pressures are coming from two main directions at once – consumers and regulators. Consumer attitudes are changing. A recent survey by Unilever showed that a third of consumers choose to buy from brands they believe are doing social or environmental good. New regulations are also having an impact. For example, the new German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz) coming into effect in 2023 will require large companies to identify, assess, prevent, and remedy human rights and environmental risks and impacts both in their organizations and across their extended supply chains. Similar legislation and directives are expected in the EU (Supply Chain Due Diligence), the UK, and other major countries worldwide.

Companies are starting to respond. In a recent survey conducted by PAC, 84% of European business leaders said their customers were important drivers in shaping their decarbonization strategies. However, there are still concerns in some quarters that companies are indulging in “greenwashing” as part of tick-box responses, and not taking any real action at all.

What Fujitsu sees on the ground is real change. There is growing overlap and even convergence between organizations’ sustainability and technology strategies. In the same PAC study, almost 80% of business leaders stated that using IT to increase sustainability was a goal of their digital transformation activities. Customers and employees are gravitating towards brands that deliver on their ESG promises. A growing number of businesses are finding that their sustainability investments can actually open up new possibilities in creating new products and services – or rapidly release cost from inefficient ways of working.

ESG strategies also involve making processes more efficient. The Rice Exchange platform provides a secure marketplace for buyers and sellers of rice to interact, handling more than $1bn of annual trades. The platform brings buyer and seller together via a blockchain-enabled platform, giving confidence to the buyer that the product is as stated, including all relevant digital documentation, certificates, bill of lading, etc., and confirming to the seller that payment will be made. Early estimates indicate that using Rice Exchange result in at least 20% savings for stakeholders and reduces the time it takes to trade by as much as 90%.