The Letters That Set the New Rules: ESG

The Letters That Set the New Rules: ESG

GDS Modellica
Whilst the School of Ephesus in all likelihood never existed, its relevance as a school of thought is still important through the philosopher Heraclitus. His most well-known quote is “Everything is flux, nothing stays still”. If you had asked company directors a few decades ago whether they would consider including non-financial metrics on their balance sheets and company accounts, they would have delivered an unequivocal response: “We are here to make money, not friends”, or, as Michael Douglas said in his role as Gordon Gekko: “If you need a friend, get a dog”.

But as the famous Ephesian philosopher said thousands of years ago, everything changes. The values associated with environmental sustainability, social issues and ethical governance are no longer a romantic fantasy and are now true business vectors in their own right.

Today, we want to depart momentarily from our usual talk about technology, legislation and other day-to-day issues to talk about two recent studies looking at the impact of ESG – environment, social, governance – and how they are now playing a key role in the decision-making process in many leading companies.

One of these surveys, produced by the company Zelros, takes a sample of a thousand people in North America and Europe. It concludes that ESG criteria are playing an increasingly important role in purchasing decisions by consumers. In the study, they address the case of insurtech companies and shed light on customer preferences, revealing that a considerable slice of them would be prepared to pay more if their service providers show a commitment to ESG values.

Two things in this study are particularly significant: one is that, as you may expect, there is greater engagement in these issues from younger customers whilst customers over 45 do not show any particular interest. The second, and this is surprising, is that men seem to show greater interest and commitment to these issues than women.

Another survey carried out by Connectd on two small samples of entrepreneurs (50 from Generation Z and another 50 over 25 years old) showed that younger entrepreneurs are most committed to issues relating to sustainability, social and governance. In fact, the vast majority would reject funds from investors who do not meet their criteria. Furthermore, more than half would have serious concerns about establishing any sort of partnership with investors whose environmental footprint could stand to be significantly improved.

Here at GDS Modellica, we have taken these key insights and put them together as an infographic for our readers to digest.
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