As the EnergyPoint Research post below summarizes, new research from Bain & Company Bain & Co. purportedly shows how leading companies are applying a "social lens" to strengthen their businesses while creating value for employees, customers, suppliers, local communities, and society at large.
One of the most influential stakeholder groups in the mood for change is customers, which have made it clear they care about the social ramifications of their brand and product choices. A Bain & Company survey found half of consumers globally say they are more likely to buy from a brand that commits to combatting racism, and more than half are more likely to buy from a brand that commits to human rights.
Our Take 1: Don't be fooled by the supposed takeaways from this report. Consultants get paid to convince execs and boards to "transform" themselves... not to stay the course. In the end, most public companies understand their obligation in the end is to maximize shareholder value.
Our Take 2: Business leaders meddling in "broad social issues" is a recipe for disaster—for business and society. CEOs can use whatever "lens" they want, but they aren't the arbiters of good and bad ideas for society. They are heads of organizations entrusted as stewards of investor capital to focus on what their organizations do best.
Our Take 3: Look at the mess Europe and the UK are in due to stakeholder capitalism. Their economic and geopolitical influence fades by the day as they wrap themselves in the latest ESG pablum and prose, hanging on to the illusory sense of self importance it affords them. Execs would be wise to kick the nonsense to the curb now and save themselves the embarrassment of having to climb down from initiatives that can only degrade performance and undermine the trust of shareholders.
Our Take 4: We've spent 20 years measuring customer satisfaction in the oilfield. There's no evidence that giving something to help a customer without getting as much or more back leads to long-term success. The trick to running a great customer-oriented company is to be so good that customers will pay more, remain more loyal, and spread the word. Maybe some will pay a bit more because a company is down for the ESG cause, but they are likely the exception. It's not ESG purity that pays a company's bills, it's competence.
Our Take 5: Here's a couple of questions to ask CEOs and board members.... Q1: "Do you believe your company's ESG policies impede in any way the ability to maximize shareholder value?"... Q2: "Abandoning which, if any, of your company's ESG initiatives would increase shareholder value—and by how much?" Our guess is, once CEOs' word salad was deciphered, it would be apparent that very few (at least at US-based public companies) will say they're willing to sacrifice shareholder value for the sake of ESG. As a result, they'll confirm that shareholder capitalism still reigns supreme—despite all their posturing.
#esg #greenwashing #consultin
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