This much is no longer up for debate: environmental, social and governance issues factor into corporate performance.
Numerous studies confirm that organizations with strong ESG records tend to have a more stable and loyal investor base, lower cost of capital, and better access to financing. An analysis by Boston Consulting Group finds that top performers enjoy valuation multiples 3 percent to 19 percent higher, all else being equal, than median performers, and margins up to 12.4 percent higher.1 We also know ESG issues matter to an ever-broadening swath of stakeholders, including many of the world’s largest investment managers as well as Millennial and iGens—increasingly influential and discerning consumers and employees.
Still, even for conscientious CEOs and boards of directors, integrating ESG into corporate strategy and culture isn’t easy.
The KPMG Board Leadership Center, in collaboration with Professor George Serafeim of Harvard Business School, has developed a five-step framework that can guide CEOs and corporate directors in shaping a company’s ESG approach—understanding why it matters, what it looks like, and how it connects to long-term performance.