Prof. J. Shanmugan Retail and Marketing
ESG and Marketability of Product & Services
The world is experiencing major challenges like pandemic, geo-political issues and climate change on one hand ,on the other hand almost every decade trade cycles, recession and inflation etc.,.
ESG stands for Environmental , Social and Governance, is a framework for identifying, evaluating and addressing organizational objectives, goals and activities ranging from carbon footprint, sustainability, ethics, workplace culture, diversity and inclusive development etc.,.The theme ESG always incremental importance during crisis (Broadstock, D. C., Chan, K., Cheng, L. T., & Wang, X., 2021).
Apart from investor community, majority of stakeholders have very little understanding on the ESG. And the concern due to lack of coordination among the firms across globe in implementation of ESG due to, not adhering to principles, values and ethics at every individual and corporate level. Nowadays, the ESG theme taking shape to address these issues by all stakeholders at international levels, though it’s prevail for more than two decades. If dissect the theme, it’s a win-win situation for every stakeholder. More of awareness and significant of this theme not reached to all the stakeholders especially the key stakeholder i.e. consumers who is the driving force to decode and fulfill the objectives. For a firm to comply all these guidelines of course their profit margin taking a hit. But considering the cascading impact the world is experiencing as on date, it’s the responsibility of each and every individual and firm level to create and disseminate the significance and to be endorsed by all the themes which saves from disasters. For any new initiatives, the initial resistance across the firm is inevitable, but the assertiveness by the firm is mandatory to address the issue for the welfare of entire systems. Any traditional culture and habits difficult to change, but change is the only constant phenomenon for the fruitful outcomes
and for better civilization.
ESG Rating agencies often giving varied numbers and disagreements, observed frequently leads to investor confusion over a particular firm. The magnitude and direction of the impact are substantially dependent on the rating provider, the company sample and the particular sub period (Halbritter, G., & Dorfleitner, G., 2015). Incorporation of environmental, social and governance considerations into investors’ portfolio decisions, (Matos, P., 2020).
In global level, lead fund managers already allocated investments to the ESG patronage firms and portfolios are clearly evident for the same. Moreover, Investor level orientation and implementation already yielding positive results and its very well poised for continuous and sustained growth. But the majority of the stakeholders have very less clue about the ESG, especially customer perspective from emerging and under developed countries. Due to digital divide and illiteracy, the awareness and significance of the theme not reached appropriately. The holistic type of system to be generated from each firm’s level to deploy these developments and promoting this culture of doing businesses and embrace ESG at the larger interest of society.
The role of marketing department of each firm across the world to delight the customers through creative communication and delivering value to the consumers. ESG rating agencies have integrated new criteria into their assessment models to measure corporate performance more accurately and robustly in order to respond to new global challenges, Escrig-Olmedo, E., Fernández-Izquierdo, M., Ferrero-Ferrero, I., Rivera-Lirio, J., & Muñoz-Torres, M. ,2019). With the help of digital technology the entire firm’s marketing information systems, the marketing analytics to be carried out from the customers and understand the thought process especially on the Environmental, Social and Governance approaches and its impact on society. Most of the consumers understand only the surface level issues which is published in media like puffery advertisements. In fact, deep level understanding is required to revolutionize and transform the industry with these principles which is eventually creates better world than the existing one. With the assistance of advanced technology and narrow media firms can directly engage with all stakeholders and providing them the crux of this theme. And also they have to make sure every stakeholder endorse these themes either directly or indirectly to protect the natural environment, society and adhering to values and principles for safeguarding the world to next generation and so on by consuming the products and services strictly produced by the firm’s adhering to ESG guidelines.
1. Halbritter, G., & Dorfleitner, G. (2015). The wages of social responsibility—where are they? A critical review of ESG investing. Review of Financial Economics, 26, 25-35.
2. Matos, P. (2020). ESG and responsible institutional investing around the world: A critical review.
3. Broadstock, D. C., Chan, K., Cheng, L. T., & Wang, X. (2021). The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China. Finance research letters, 38, 101716.
4. Escrig-Olmedo, E., Fernández-Izquierdo, M., Ferrero-Ferrero, I., Rivera-Lirio, J., & MuñozTorres, M. (2019). Rating the Raters: Evaluating how ESG Rating Agencies Integrate Sustainability Principles. Sustainability, 11(3), 915. MDPI AG. Retrieved from http://dx.doi.org/10.3390/su11030915