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How To Attract Conscious Consumers To Your Business - Forbes

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ESG investing strategies—which include any investment approach that accounts for environmental, social, and corporate governance factors—have surged in popularity in recent years among retail and institutional investors. This trend mirrors the evolution of consumer behavior and the rise of what some have dubbed “conscious capitalism.” As younger generations (particularly Millennials) amass more spending power, they’ll continue to weigh brands’ ESG policies when making both long-term investments and daily purchasing decisions.

In fact, Nasdaq President and CEO Adena Friedman believes that this year marks the shift in conscious consumer behavior. “Last year, I predicted that 2019 would be a big year for the emergence of ESG, and there were real signs of progress—particularly as ESG decision-making rose to the board C-suite level across many industries,” she writes. “2020 is increasingly looking like it may be the ‘tipping point’ year for ESG investing.”

Brands that demonstrate a clear commitment to sustainability, positive social change, or responsible corporate governance (or all three) will benefit immensely from this changing paradigm. And those that don’t will fall by the wayside.

ESG Is Here to Stay

If you think ESG strategies are a corporate fad or market trend, consider this: about 70% of consumers would be willing to pay 5% more for alternative “green” products or services of the same quality, 70% of people want to know how brands are addressing social and environmental issues, 48% of customers would likely change their consumption habits to reduce their impacts on the environment, and almost half of companies that implemented sustainability programs aimed to capitalize on business and growth opportunities.

Today, many companies are capitalizing on those opportunities because of their efforts. Unilever, the parent company of the Dove and Axe brands, among others, developed a dishwashing detergent that uses significantly less water than its subsidiaries’ soaps. The company created Sunlight for water-scarce markets, and robust sales in those markets outpaced overall category growth by more than 20%.

But organizations aren’t just embracing the “e” of ESG; many others are making social efforts and corporate governance part of their core missions. Etsy, for instance, not only offsets 100% of its carbon emissions but also focuses on supporting women-owned businesses. Roughly 87% of its store operators are female, and women make up half or more of its board and executive team. Over the past two years, Etsy’s net worth has skyrocketed from about $8 billion to $15 billion.

Establishing and executing strong ESG propositions allows companies to enter new markets, drive loyalty among existing customers, deliver value to shareholders, and attract conscious consumers. If your company isn’t currently pursuing ESG-related initiatives, it’s not too late to start. Here’s how:

1. Set realistic, actionable goals.

An ESG business approach will look different for every company. Identify a few criteria that, if adopted, would lead to measurable environmental, social, or corporate improvements. Ideally, the initiatives you choose to implement will reflect your company values and will align with your core business strategies. This will improve the odds that you can scale and sustain them over time.

Suzanne Copeland, CMO at Sterling National Bank, highly recommends pinpointing your focus. “You can’t just let nature take its course,” she says. A great brand and a strong company culture can support your efforts, but you need a defined approach to ESG.

Of course, individual employees and executives will gravitate toward different causes. You probably wouldn’t have much trouble finding two team members who hold opposing beliefs. It might be hard to identify just a few issues to focus on, but this is a necessary step. Clearly articulate priority initiatives and avoid trying to execute more than five at a time.

2. Make sure marketing aligns with reality.

Modern consumers demand transparency from brands, and they have virtually unlimited access to information. That’s great for companies genuinely committed to making a positive impact, but it’s not great for those that say they’re committed but aren’t. If your company’s actions don’t match your corporate message, consumers won’t just avoid you—they’ll want you to pay.

Passion for a particular cause or belief doesn’t just influence people’s investment and purchasing decisions; it’s what compels them to attend marches, protests, and town-hall meetings. It also compels them to spread the word when they spot companies actively undermining that cause or belief. Thanks to social media and review sites like Yelp, Glassdoor, and others, word spreads fast in today’s world.

On the other hand, if you are doing great things in your community or leading the charge in corporate diversity or environmental preservation, talk about it. If you’re not mentioning your ESG initiatives in your marketing, you’re missing out on a big opportunity to attract new customers and inform audiences of your commitment.

3. Take action and track your progress.

There are countless steps you might take to begin working toward your ESG objectives. However, you could start by making them a core part of your corporate identity and culture. Scott Honour, co-founder of Northern Pacific Group, a private equity firm, believes that company transformation begins with the individuals inside the company.

“At NPG, we try to demonstrate leadership in climate action as a team by taking actions in our personal lives to improve the environment as well as focusing our investing efforts in ways that improve sustainability,” Honour says. “As an example, we acquired Sungevity, which is a leading residential solar company and which has a direct impact on the environment. Most recently, we sponsored Sustainable Opportunities Acquisition Corp. to bring a sustainability theme to the public markets.”

As you implement your ESG program, track its progress regularly and look for areas where you can improve. Publish your achievements and observations in an ESG initiative report to ensure that analysts and investors can stay abreast of your work. To benchmark your progress, you could also use one of several ESG ranking indices that rate companies in relation to industry peers.

Not all of your ESG initiatives will lead to immediate ROI, and some might not produce tangible results at all. However, by demonstrating a true commitment to positive change, you’ll catch the attention of the growing number of ESG-minded consumers and make the future of your business—and the world—a little brighter.

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