Can ESG investments make a positive social impact?

Yes, absolutely. These days, investors of any kind can find ways to promote social responsibility through ESG investing. Investments in ESG-focused companies go beyond financial returns, to promoting social responsibility such as protecting employee welfare and fostering relationships between businesses, shareholders, and communities.¹

Who benefits from ESG investing?

ESG investing can also serve multiple beneficiaries. Employees stand to benefit from a company that addresses and actively works on high-profile governance issues such as gender and ethnic diversity and equity. Initiatives to solve such social issues show investors that the company and its board are listening to societal cues. In recent years, institutional shareholders have increasingly been pushing for greater representation of women on boards and in executive ranks, and many companies have begun emphasizing the potential financial benefits of more diverse and inclusive workplaces.² These actions not only potentially benefit customers and employees but may also add to the growth of communities.

How does gender and ethnic diversity work?

Companies that are focused on employee engagement may see a boost to team productivity through higher job satisfaction and employee well-being. One study found that companies with greater gender or ethnicity diversity were more likely to achieve higher profitability than companies that had less diversity.

Furthermore, having diverse cultural mix in the workplace can inspire creativity and drive innovation.¹ Different perspectives can help solve problems, add creativity to product development and meet customer needs. A multicultural workforce can help an organization expanding into new market through their understanding of local laws, regulations, and customs, as well as local connections, native language skills, and cultural understanding.

How millennials impact customer brand loyalty

From a customer’s standpoint, corporate social responsibility (CSR) can help create a strong brand. These days, more millennials are becoming environmentally and socially conscious about their everyday decisions from investing to even shopping for groceries and services.² The younger group on consumers shows increasing influence on companies to produce eco-friendly products and those firms are faced with pressure to become good corporate actors if they wish to win this generation’s loyalty. By creating a strong brand that embraces good governance, companies may be able to gain the loyalty of millennials as well as those from other generations who place a high priority on ethical corporate behavior. This is also relevant in terms of attracting the best talent in the market (from a shareholder’s perspective) as more employees seek roles in companies with strong corporate values.