Organizations have traditionally used environmental, social and governance (ESG) reporting as a way to mitigate climate-related risk and demonstrate sustainability compliance. However, as decarbonization and social transformation come into focus, ESG's role as a value creation tool for food companies is growing.
In an article for FoodDive, Molly Podolefsky, director at Guidehouse, explains that increasingly brand-conscious consumers with easy online access to information about companies’ sustainability expect brands to demonstrate commitments to environmental and social sustainability to earn their loyalty. Companies that harness ESG in operations and brand image are rewarded with increased revenue driven by socially and environmentally conscious buyers—and can also secure investment opportunities from similarly environmentally-minded investors.
“By harnessing ESG reporting and disclosure to signal sustainable value, consumer packaged goods firms can unlock investment opportunities through a host of green asset managers and funds, while proactively managing activist investor risk,” said Podolefsky.
In the article, Podolefsky also notes Guidehouse’s recent white paper, “Navigating the Decarbonization Journey,” which describes the characteristics of firms that will flourish in a carbon-free future. She explains that one of these characteristics, transparency, best defines ESG and explains its ability to unlock value for companies.
“By disclosing risks in a transparent manner, firms that leverage ESG gain the trust and loyalty of customers, employees and investors who only want to invest time and money in alignment with their values,” explained Podolefsky.