Smart MBA –ESG – New Norm for Consumer Brand Preferences

Environment, Social and Governance (ESG) has taken a front seat for analyzing the corporates for purpose over profit. The pandemic has added lot of value to the understanding that sustainability is not about profits but about purpose. This is a very important learning skill for the MBA students so as to understand the changing trends of concentration on Sustainability through ESG rather than being an only profit driven organization. The matter of the fact is that today’s MBA aspirants must be well read about the impact on consumer perception about a certain brand is majorly impacted by the rating/ranking of the company on ESG. An article published by Forbes agency council on Building Brand Integrity through ESG reporting and the brand impact of ESG reporting says that a brand is a perceived relationship between stakeholders and a company. It’s a constant dialogue, so it’s essential to have open channels of communication. ESG reporting gives tangible data to the intangible asset that is a company’s brand. It also allows companies to publicly align themselves with certain values that affect brand perception. And that perception affects the bottom line. A strong brand affects margins, customer satisfaction, recruiting and purchasing decisions.

According to a research by LinkedIn, 71% of professionals said they would consider taking a pay cut to work at a company that aligns more with their values. In a 2019 Clutch survey, 75% of respondents said they “are likely to start shopping at a company that supports an issue they agree with,” and 71% said that environmentally friendly business practices are one of a company’s most important attributes — more important than price.

Management guru Peter Drucker said, “What gets measured gets managed.” ESG reporting is a practical way for companies to measure and manage risk. Reports assure shareholders, clienteles and other stakeholders that they are getting complete transparency in regard to the company’s operations and future objectives. They’re also an effective form of accountability for forward-thinking management who want to measure values versus action over time.

Thus, for the past so many years an MBA have been involved in financial, sustainability and climate reporting, and in recent years, they are now developing ESG reports so as to align them with the corporate brand and strategies.

The markets and top talent are following the companies that demonstrate a commitment to ESG. For leaders at mid-market or enterprise companies that haven’t considered ESG reporting, I believe the time is now.

India has introduced new environment, social, and governance (ESG) reporting requirements for the top 1,000 listed companies in the country by market capitalization. The Securities and Exchange Board of India (SEBI) stipulates that the disclosure must be made through a new format, namely the Business Responsibility and Sustainability Report (BRSR).

So for the new MBA aspirants, the advice is to get up skilled in the ESG norms for company perception. This redefines the propaganda of sustainability through purpose.