Setting New Goals with an Emphasis on the ‘S’ in ESG

By Silvia Davi

It goes without saying that 2020 has been an incredibly unusual year. We’ve had to endure a global pandemic, lockdowns, widespread social unrest, and a Presidential election. Companies across many industries have had to quickly adapt to the “new normal” in order to effectively service clients and employees during this time of ongoing uncertainty. Transformation has been the name of the game in the midst of a fluid and uncertain environment, which has required organizations globally to rapidly adapt to technology led workforces.

As we begin year-end planning, company leadership teams have the opportunity to evaluate how their corporate brands have grown and changed during this crisis, and position their brands successfully in an authentic way as we kick off 2021.

For starters, one must ask what your company did well in response to the pandemic, and what could have been done better. Did you communicate regularly with your clients and other constituents to keep them abreast of changes in service, or let them know you were there as a source of support? Were you able to provide your products and services with minimal disruption? If not, how can you modify your operations, team infrastructure, and supply chain to avoid such a scenario in a future crisis? These are all practical business continuity questions corporate leaders should take into consideration when reflecting on the past year and planning for the year ahead.

As a standard best practice, following a year of crisis, corporate leadership teams should review their companies’ mission statements, positioning documents, and brand identities during the year-end planning period, and ask themselves honestly if this content still resonates with customers and other constituents in today’s climate. Also, if they don’t already have corporate responsibility programs in place, they should ask themselves how to develop plans that will engage their workforce in giving back. Whether you are a start-up or a large organization, there are things your teams can and should be doing to make the world a better place.

With so much recent attention devoted to the importance of our communities, as well as equality and social justice, during 2020, companies need to be seen making a positive social impact in addition to achieving their business and financial goals in 2021. Otherwise, you risk being seen as out of touch, and your corporate identity can suffer. This doesn’t only hold true for large organizations, it’s an important task for small and mid-sized companies to understand as well.

I remember a time when corporate communications and marketing professionals like myself recommended to CEOs not to make public statements about social issues, for fear of generating controversy or alienating certain groups. In our interconnected world, where a single negative social media post can potentially destroy a well-established personal or corporate brand in a matter of minutes, this still holds some truth. But the difference now is that leaders and organizations are taking a stance on many key health, diversity and inclusion issues, and adding your corporate voice helps reposition or further your brand and culture—which is what employees, investors and clients are very interested in seeing.

And from an investment perspective, it can have an effect on your bottom line. Publicly traded companies that fail to implement corporate initiatives to make a positive social impact can suffer financially. According to Callan’s seventh annual environmental, social, and governance (ESG) survey, conducted and published in 2019, nearly half (42%) of U.S. institutional investors take ESG factors into consideration when making investment decisions, or are thinking about doing so in the future—up considerably from 22% in 2013.

Furthermore, the Capgemini World Wealth Report 2020 found that high-net-worth individuals plan to allocate 41% of their portfolios to sustainable investing products by the end of this year, and 46% of their portfolios to this asset class by the end of 2021. Meanwhile, 52% of high-net-worth investors consider socially conscious business policies and practices to be an area of focus when considering sustainable investing products.

The disruption, fear, and volatility brought on by the pandemic, as well as heightened social unrest, have made investors more conscious of opportunities to make a positive social impact through their investments. Publicly traded companies that do not have ESG policies in place can be screened out of portfolios by investment and wealth management firms that evaluate equities and bonds based on ESG criteria.

Embracing Social Responsibility

To help your audiences associate your corporate brand with the “S” in ESG, you have to identify smart ways to position your business as a force for social good, while looking for socially responsible partners that complement your brand, mission, or initiatives.

On the flipside, it’s also important to carefully research partners and third-party vendors to review and evaluate their practices, as any negative or harmful ethical or environmental practices of theirs can also reflect poorly on your company’s public image or brand if not properly addressed.

In addition to choosing your partners carefully, companies can harness their innate differentiators, including their in-house talent, to strengthen their brands.

For example, at 280 CapMarkets, we enhanced our electronic fixed-income marketplace with special features for helping investors and their financial advisors find and evaluate green and environmentally friendly bonds—and efficiently and securely execute trades on these bonds. We have partnered with media outlets to educate investors about green bonds, and raise awareness of how these types of fixed-income investment products can help meet crucial social needs in communities around the country. In addition, we have teamed up with fintech providers like Just Invest (a specialist in ESG data analysis, algorithms, and risk modeling) to empower advisors to offer green and environmentally friendly bonds within an ESG-tilted, efficiently tax-managed portfolio.  

In addition, our CEO, Gurinder Ahluwalia, penned an op-ed for InvestmentNews, a widely read and respected media outlet in our industry, about how financial services and technology firms can strengthen diversity. Drawing on his own professional and personal experiences as a minority leader, Gurinder explained that financial services companies should consciously avoid allowing a candidate’s cultural or behavioral differences to obscure their true aptitude.  

Although we are a smaller, private company, we have made an effort to get in front of important issues in our culture, and proactively demonstrate how our products, services, and insights are making a positive social impact. We encourage our leaders to get involved. I personally serve on the Board of Directors of Tuesday’s Children, a nonprofit organization providing a lifeline for families devastated by 9/11 and other traumatic events, and on the advisory boards of various groups serving women in finance.

As we enter the last few weeks of an unprecedented year, companies of all sizes have the opportunity to reflect upon the year’s challenges and social dilemmas. It’s more critical now than ever to incorporate the “S” in ESG into your corporate and personal brand. We can all contribute, no matter how big or small. This is a call to action for all organizations to reflect on how they can add value while giving back to social causes that will resonate with their stakeholders, as they pursue ongoing growth in 2021.

Silvia Davi is Chief Marketing & Corporate Development Officer at 280 CapMarkets, a fixed income technology company providing market clarity and best execution to empower financial advisors and institutions.