In recent decades, ESG, or “environmental, social, and governance” metrics, have risen to the top of corporate to-do lists, buoyed by evidence that being responsible corporate citizens can make for happier employees, healthier communities, and even a better bottom line. 

Broadly speaking, ESG is a framework that drives how companies address environmental sustainability; treat their employees, communities, and other social aspects of a business; and govern ethically. 

And now, awareness around ESG topics is moving from conference tables to kitchen tables. Amid climate change woes, social justice movements, and a pandemic-related shifting of the workforce, consumers are more often realizing that they can make an impact across their communities and the globe when they are intentional about where they shop, bank, invest, and work. 

“Consumers have always had the power to vote with their dollar,” says Richard Steel, author of “Elevated Economics: How Conscious Consumers Will Fuel the Future of Business” and a Harvard Business School graduate. “They are increasingly doing that now.”

Not a passing fad

Interest in ESG at the corporate level has skyrocketed, especially in the last decade. Some 92 percent of S&P 500 companies published sustainability reports in 2020, up from just 20 percent in 2011, according to the Governance & Accountability Institute, a consulting firm. 

ESG practices can attract more customers, reduce energy costs, and boost employee motivation.

Debra Brown, co-author of “ESG Matters: How to Save the Planet, Empower People, and Outperform the Competition,” sees several triggers for that growth. Government regulations such as the Sarbanes-Oxley Act in the United States have forced corporate reforms. Evidence of climate change is prompting more action about environmental practices.

In addition, the growth of socially responsible investing, which considers both the social impact and financial benefit of investments, has taken off. One of every three dollars under professional management in the United States, or $17.1 trillion, is managed with sustainable investment strategies, according to the Forum for Sustainable and Responsible Investment’s 2020 trends report.

It doesn’t hurt that there’s a strong business case for ESG, too. McKinsey, the consulting firm, counted a variety of ways a company’s strong ESG practices can spark success, including attracting more customers, reducing energy costs, and boosting employee motivation. Barrons’ annual ranking of America’s Most Sustainable Companies found in 2020 that they outperformed the S&P 500 index by several percentage points. 

“Careers in ESG, corporate responsibility, sustainable finance, and impact investing are highly rewarding and sought after, particularly by Millennial and Gen Z talent,” says Lora Phillips, vice president and director of ESG practices at PNC. She also sees an opportunity for employees whose roles are outside the ESG team to have an impact when it comes to corporate responsibility. “When every employee’s actions are grounded in an understanding of how what they do helps to contribute to better outcomes for all people, employees feel an enormous sense of pride,” she says. “They stay at their employer for longer periods of time, and they’re better able to address the needs and concerns of their diverse customers — both internal and external.”

For these reasons, experts say ESG is far from a passing fad. “Businesses aren’t going to pay lip service to it because of the business case for it,” Brown says. “And as you get more people working in organizations that are motivated by ESG, that’s going to infuse, culturally, these concepts of ESG into the organization.”

Cascade of good 

How ESG plays out varies widely, typically based on a company’s values and mission. In her book, Brown tells the story of a small Florida brewery that gained a large following after spending money on creating biodegradable six-pack rings instead of marketing.

Consumers and employees alike are driving corporations to make meaningful ESG commitments.

But the efforts can cascade to every business practice and priority. At PNC, for example, the company is committed to serving a greater purpose. And its efforts influence actions across its operations — from how it invests in its employees to its dedication to building up the communities it serves and to data privacy and protection for its customers. 

“Our commitments shape how we do business,” says Phillips. “We’re committed to delivering on our strategic priorities while looking out for the best interests of all our stakeholders, including our customers, communities, employees, and shareholders.

On the environmental side of ESG, PNC’s work includes a commitment to enhancing the operational efficiency of its buildings and helping clients finance energy-efficient and renewable energy projects. 

On the social side, it fosters employee engagement with competitive benefits and a strong commitment to diversity and inclusion. The company also is prioritizing communities where it does business through relationships with local nonprofits that promote economic enrichment and early childhood education. 

And on the governance side, it has extended its own code of conduct to suppliers to ensure that they also operate with ethical business practices, are committed to equal employment opportunities and are strong stewards of the environment and the communities where they operate. 

Phillips cites PNC’s Community Benefits Plan as a “shining example” of the company’s ESG commitments. The $88-billion-dollar pledge will “provide loans, investments, and other financial support to benefit low- and moderate-income individuals and communities, people and communities of color, and other underserved individuals and communities over the next four years,” she says. “It is inclusive of our previously announced commitment of more than $1 billion to support the economic empowerment of Black and low- and moderate-income individuals and communities.”

There is no one-size-fits-all approach to ESG, Phillips adds, but part of PNC’s success lies in never prioritizing short-term gains over long-term value. “We believe that being true to our values; honoring, respecting and celebrating our differences; being responsible stewards of our planet’s resources; and keeping our clients’ needs front and center, allows us to be agents of positive change in every community where we operate,” Phillips says. “We know that this is something our employees are proud of, and we hope our clients can be proud of it, too.”

A time to “raise the alarm”

Consumers are taking notice of the efforts of companies like PNC. Thanks in large part to social media, they also have more resources to make their voices heard as they push for better working conditions or call out companies who haven’t taken ESG values to heart. Steel expects that will only continue — fueling continued adoption of ESG practices among companies and corporations. 

“Anybody on social media of any kind can raise the alarm, raise the profile of some of these E, S, and G issues for any company that they interact with,” said Steel.

And while “ESG” might not yet be a common turn of phrase for average consumers chatting about working conditions at their employer or the environmental practices of their favorite retailer, Brown said it should be.

“ESG matters. The environment matters. People matter. Our corporations matter,” she says. “These things matter. They matter to our communities, and they matter to the world.”