Values, Meet Value For Money: 5 Business Reasons For Committing To Sustainability and ESG

Image credit: Annie Spratt via Unsplash

Doing the right thing isn’t always easy, particularly for businesses. Making a bold commitment to your brand’s purpose and values might be good for the soul, but without a solid commercial return on that investment, you’re unlikely to get very far. One of the most common questions we get asked here at Fox + Hare is: “Sure, all this sustainability stuff sounds great, but how do I get it past my finance team?”

Well, there’s some good news: you don’t actually have to choose between values and value for money. With consumers, employees and investors increasingly drawn to brands which speak confidently and act credibly, the commercial value of ESG and sustainability is no longer just about compliance or ethics: it’s a powerful driver of business performance and long-term profit.

Here are our top 5 reasons why your brand should lean into your purpose-led values, and how it can end up benefiting your bottom line.

Consumer Demand and Brand Loyalty

Speak to your customers, and the message is clear: people of all ages and backgrounds are increasingly drawn to brands that genuinely care about doing good. Studies consistently show higher demand for businesses which demonstrate a commitment to sustainability and social responsibility, like a 2022 survey by Edelman which found that 64% of people choose, avoid, or boycott brands based on their stand on societal or ethical issues.

Fox + Hare’s own research for our insight report “Purpose In A World Under Pressure” backs this up. We found that nine out of ten people expect brands to focus on social and environmental responsibility in 2024, while more than three quarters said they’ll proactively seek out those brands as a result. These associations affect real-world buying habits too: 47% of the people we spoke to said that a brand’s purpose positively influences their purchasing decisions, while 40% are happy to pay more for products or services from socially and environmentally responsible brands.

Despite this, too few companies are capitalising on this opportunity to connect with their audiences. Our research shows that only 33% of people think that companies are communicating their purpose effectively, while 40% want to see brands taking more tangible action. For any business with the confidence to step into this space, there’s a huge untapped market waiting to be captured.

Investor Confidence and Financial Performance

The financial benefits of leaning into sustainability, ESG and purpose go further than your customers, with investors increasingly part of the picture too. Research by the Institute of Business Ethics shows that purpose-led businesses outperform their competition by 7% annually, while a recent study by McKinsey shows that purposeful brands deliver 2% greater shareholder returns than companies focused solely on profit.

This makes perfect sense, when you think about it: businesses that consider the impact of their work from a variety of different perspectives, and think expansively about how they operate, are likely to have better risk management in place, find different and more efficient ways of doing things, and develop access to capital from socially conscious investors. Businesses that only focus on the bottom line are subtly signalling to investors that they don’t really care about the big picture, and might be suffering from a form of tunnel vision.

Employee Engagement and Talent Acquisition

Committing to your values doesn’t just mean talking to your external audiences, either, but your internal teams as well: being a leader on sustainability and ESG can significantly enhance employee morale, and help you attract top talent. Because who doesn’t want to work for one of the good guys

This is particularly true for younger generations, with millennials and gen Z (who will soon comprise the majority of today’s workforce) consistently prioritising companies with strong ethical values: a 2024 study by Deloitte revealed that 44% of gen Zs and 40% of millennials have turned down an employer based on their personal beliefs. If you want to get the best up-and-coming talent working for you, you’ve got to show them that you’re committed to doing the right thing.

But this isn’t just a generational issue, and affects retention as well as recruitment. A recent study by Gallup revealed that 74% of employees find their job more fulfilling when they’re given the chance to make a positive impact on social and environmental issues. This is reflected in their output: Deloitte have found that businesses with a clear approach to purpose and sustainability are on average 18% more productive and 12% more profitable.

Regulatory Compliance and Risk Mitigation

Every day, it seems like there are new rules and regulations focusing on sustainability and positive impact, each requiring subtle shifts in how businesses operate. From recent UK legislation on greenwashing to the UN calling on the advertising industry to do better on sustainability, the growing trend for national and global organisations to hold businesses accountable for their actions is undeniable.

By being proactive about your approach to ESG and sustainability, you can stay ahead of these regulatory changes, and mitigate the risks associated with them: adopting sustainable practices, and making sure that your actions line up with your principles, is a far smarter investment than fines and reputational damage, or an expensive last-minute scramble when new rules are brought. Companies that take the lead on sustainability, ESG and purpose are also better positioned to influence policy and industry standards - making those regulatory challenges easier to manage and plan for long-term.

Innovation and Competitive Advantage

Committing to sustainability means stepping out of your comfort zone: this might seem scary at first, but it’s also where genuinely innovative thinking and agenda-setting work happens. Brands like Patagonia or IKEA, who’ve embraced sustainability throughout their supply chains, have also discovered more exciting, creative and profitable ways of working as a result.

ESG drives innovation by encouraging companies to rethink their products, services, and processes, with sustainable practices often leading to the development of new markets and revenue streams. Brands that commit to new ways of doing things are also often see as industry leaders, differentiating themselves from competitors and gaining vital competitive advantages over the rest of their sector.

Overall, the picture is clear, and backed up consistently by the evidence: when done right, committing to ESG, sustainability and positive impact doesn’t have to mean sacrificing profits, market share or investor confidence. In fact, it’s the reverse: get your approach to sustainability right, embrace it confidently and communicate it clearly, and you won’t just be helping build a better world, but also putting your business on a more solid and profitable footing for the future.