Leading By Example: ESG-Focused Companies to Watch
It’s no secret that sustainability and social consciousness are becoming increasingly important to businesses, customers, and investors. Environmental, Social and Governance (ESG) strategies have become key competitive differentiators for companies in every industry. Investors will put their money behind companies that align with their personal values and priorities. Addressing climate change, diversity in leadership and social change are all factors that stakeholders care about when choosing a company to work for, invest in, or purchase from.
While many companies are playing catch-up with their ESG strategies, there are companies that stand out from the crowd due to their leadership in each of the three ESG categories. Let’s take a look at five companies that are leading the pack with a strong focus on ESG.
Microsoft stands out for its strong stance on environmental change. The climate crisis is a rising threat, and companies that want to succeed need to consider their environmental impact. Microsoft has taken the lead in addressing climate change by becoming the first company among its peers to commit to being carbon negative by 2030.
By creating a $1 billion fund to reduce emissions and start clearing carbon, Microsoft has set itself apart from its entire sector. It also earned the highest ESG rating of AAA from MSCI ESG Research in 2019.
Another MSCI AAA-rated company is SAP, which has been an industry leader in ESG since 2018. SAP is focused on its “path to zero,” including zero waste, zero emissions and zero inequality. The company is committed to going carbon neutral by 2023, which is two years earlier than its original goal. SAP has also launched the Climate21 program, building capabilities into its enterprise applications that can help customers understand and minimize the greenhouse gas footprint of their products and operations.
Regarding the social component of ESG, SAP is committed to strong Diversity, Equity, and Inclusion (DEI) policies. The company’s SAP Women Forward initiative aims to “foster a supportive and engaging ecosystem that brings together professionals from all industries to drive awareness of women’s issues, share knowledge, and empower one another to succeed.” By demonstrating commitment to all three aspects of ESG, SAP has established itself as a leader among its peers.
Adobe is included in the Investor’s Business Daily (IBD) list of 50 Best ESG Companies. It also made the Dow Jones Sustainability Index world list for the past four consecutive years. According to MSCI, Adobe scores a perfect 10 in relation to its peers on carbon emissions. The company is also committed to use 100 percent renewable energy by 2035.
Besides its commitment to reducing its environmental impact, Adobe is leading the way in its industry on pay parity between men and women. The company achieved complete parity in 2018, and continues to monitor pay levels to ensure they remain on par. And on the governance side, Adobe is committed to cybersecurity and data privacy, earning a high level of trust with customers.
As a producer of computer components, NVIDIA needs to source minerals for its chips and graphics cards. As a result, the company is very involved in the environmental and social issues related to mining. NVIDIA is known for its strong diligence in responsibly sourcing minerals and never using conflict minerals in its products.
NVIDIA ranked No. 1 on IBD’s Best ESG companies list in 2020, holding a perfect composite rating of 99. Such a high ranking is not possible on environmental sustainability alone, and the company also has a significant focus on human capital development. It’s employee-focused initiatives include professional development courses, career services, an employee stock purchase plan, tuition reimbursement and more.
By focusing on ESG, NVIDIA has gained a competitive advantage over competitors by being able to attract and retain top talent. Investors have taken notice and NVIDIA is a member in MSCI World ESG Leaders Index, the Dow Jones Sustainability Index and the FTSE4Good Index. It’s also in the Bloomberg Gender Equality Index, as well as the Equileap Gender Equality Index. NVIDIA is a titan in the ESG space, and it stands tall in the technology sector.
Home Depot stands head and shoulders among many companies in the retail space when it comes to ESG policies. The company has remarkably high standards for product safety and a strong supply chain. Its supply chain is significant because it ensures that the wood sold the company’s stores is sustainably sourced. Home Depot also reformulated its paint products, insecticides, and vinyl flooring to improve chemical safety.
Along with its focus on sustainable sourcing and product safety, Home Depot is committed to diversity. Of its 12-member board, four members are women and four are nonwhite. It’s workforce is also diverse, as 44 percent of employees are ethnic minorities and 38 percent are women. The company acknowledges that population demographics are changing, and their workforce needs to reflect that. Home Depot has an MSCI rating of AA and is considered an ESG leader in the retail sector.
Companies that want to stay competitive in today’s global marketplace need a robust ESG strategy to win over investors and retain their employees and customers. Millennials and Gen-Z are particularly interested in ESG competency when making investing and purchasing decisions, and when deciding which companies they would like to work for. Financial institutions all over the globe are changing how they invest to mitigate risk and adhere to the wants and needs of their customers regarding sustainability and social change.
A strong ESG strategy extends outside of a company’s walls, and partnerships can play a significant role. If your company is interested in working with a partner that is driving social change, connect with us today to learn about Televerde’s socially responsible business model.