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ESG-Informed Companies Increased Revenues by $3.1 Billion

84% of companies said the ability to raise capital became “easier” as a result of accelerating their ESG policy, according to a Moore Global report. According to a study by EDHEC Business School, 95% of startups that have implemented ESG initiatives see “a real benefit.” The report categorizes startups according to 4 typical profiles: ambassadors (40%), aware (38%), pragmatic (13%) and passive (9%).

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Accounting firm Moore Global has released a report around the impact of ESG on companies’ business performance. A total of 1,262 companies with more than 250 employees based in Australia, France, Germany, Italy, the Netherlands, the United Kingdom, and the United States were surveyed between May and June 2022. Over the past three years, companies that said they valued ESG saw a 9.7 percent increase in revenue, compared to “only” 4.5 percent for those that did not consider it.

U.S. companies that took ESG factors into account saw their revenues increase by $2.1 billion, ahead of European companies ($930 billion) and Australian companies ($59 billion), for a total increase of $3.1 billion. For their part, companies that did not take extra-financial criteria into account experienced a “much smaller” increase in revenue, with $402 billion.

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Better access to financing

While “the vast majority of companies have had to invest to improve their ESG performance”, the costs “appear to have been offset by better access to funding”. Indeed, 84% of companies reported that the ability to raise capital had become slightly or significantly easier as a result of their ESG acceleration.

In detail, 92.9 percent of IT companies said that engagement with ESG had slightly or significantly improved their ability to raise capital. “Energy-intensive industries have a harder time adapting their operations to ESG principles, while service sectors such as IT probably have a much easier transition,” said Sam Miley, economist and author of the report.

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59% of French startups already have ESG initiatives in place

EDHEC Entrepreneurs, the incubator of EDHEC Business School, in partnership with STATION F, has published a study aimed at “taking stock of environmental, social and governance (ESG) practices in the French ecosystem.” Conducted among more than 200 startups, the survey reveals that more than 90% of them claim to “be convinced of the importance of ESG initiatives.” The report categorizes startups according to 4 typical profiles: ambassadors (40%), aware (38%), pragmatic (13%) and passive (9%).

In detail, 59% of startups have already implemented ESG initiatives, while 90% of them “take into account the ESG involvement of a partner in their selection criteria”. The survey also highlights that 95% of startups that have implemented ESG initiatives see “a real benefit”.

Pressure from stakeholders

However, the report states that “while the desire to act is there, ESG issues are often perceived as complex. Among the “obstacles” cited by startups, 58% mention “lack of resources” while 49% say they lack “time”.

In addition, EDHEC added that the various stakeholders do not fail to put “pressure” on startups regarding “the need to integrate ESG issues”. These requests regarding their responsible practices come “mostly” from their customers (21%), then from their business partners (15%), incubators (14%) and employees (12%).

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(Featured image by geralt via Pixabay)

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First published in ID and ID, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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J. Frank Sigerson is a business and financial journalist primarily covering crypto, cannabis, crowdfunding, technology, and marketing. He also writes about the movers and shakers in the stock market, especially in biotech, healthcare, mining, and blockchain. In the past, he has shared his thoughts on IT and design, social media, pop culture, food and wine, TV, film, and music. His works have been published in Investing.com, Equities.com, Seeking Alpha, Mogul, Small Cap Network, CNN, Technology.org, among others.