One More Light Bulb

Has this ever happened to you?  You are speaking with someone, perhaps explaining something, and they aren’t getting it.  So you try a different approach vector, but they still don’t understand.   You try again, with the same result.  But the fourth time you see the light bulb go on; they see what you are trying to communicate and they agree.

While I have never had a conversation with anyone at the Wall Street Journal, I must confess I have seen numerous pieces (in fairness, not all) in that particular publication disparaging the very concept of ESG.  I have also had many conversations with ESG nay-sayers.  I’m talking about folks who, for any number of reasons, are either unable or unwilling to grasp my ESG message.  And what message is that, you ask?  First, that investors who incorporate ESG analysis within their due diligence will enhance both the quality of their analysis and the quality of their investment decision.  Second, that companies who consider the interests of their many stakeholders in constructing strategy and policy will outperform those companies who do not consider those interests.  And third, using the term “non-pecuniary” to describe ESG factors makes no sense … all ESG factors are financially relevant to a company.

Now on to the matter at hand … an article in the Wall Street Journal yesterday highlighted a recent analysis of the impact of ESG factors on corporate performance.  The Drucker Institute at Claremont Graduate University, working with the Wall Street Journal and Bendable Labs, produces The “Management Top 250”, a company quality ranking using 32 indicators drawn primarily from the work and philosophy of the late American business guru Peter Drucker.  The study’s primary conclusion was that companies showing the greatest positive ranking movement over the last five years were those whose ESG metrics improved the most over that same period.  As one company CEO who provided data to the study noted, “in general, better responsibility and better sustainability means better cash flow, better risk management and better value creation.”

And there we have it.  One more light bulb glowing brightly.

At the risk of sounding self-serving, perhaps if you pass along this article to someone you know we can continue to light the path forward.



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