Responsible Business and Investing Practices (ESG)


The Case for Responsible Business and Investing Practices
Why Environmental, Social & Governance (ESG) Factors Are Good for Business

Responsible business operations and investing are no longer optional but essential for long-term financial success. Incorporating practices that include environmental, social, and governance considerations (ESG) positions businesses to navigate the challenges and opportunities arising from climate risks, evolving regulatory landscapes, and stakeholder demands. For long-term viability, American businesses need the freedom to operate responsibly. Yet, the freedom to consider ESG risks and impacts is under attack, fueled by special interest money and political culture wars that have nothing to do with protecting Main Street businesses. These attacks must be met with resistance. When policymakers protect business and investor freedom to operate responsibly, responsible practices become a core corporate strategy and foster a more resilient economy.

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Key Takeaways

Boosting Investor Confidence and Return on Investment: U.S. investing trends reflect a growing preference for responsible business practices that incorporate ESG considerations.

Meeting Consumer Demands: Nearly two-thirds of younger consumers seek to support sustainable brands, and these evolving consumer preferences are attracting crucial financial support from private equity investors.

Mitigating Climate Risks: Climate change presents new risks to business operations. Increasing climate resiliency positions companies to respond to these changing and often unpredictable conditions and mitigates financial risk for investors.

Building Competitive Teams: Social factors like diversity are a matter of responsible business. Teams with diverse backgrounds and perspectives are more adept at identifying pitfalls and challenges from various angles, and diversity creates well-rounded strategies and more effective risk mitigation approaches.

Upholding Ethical Standards: Responsible governance is a regulatory necessity and essential strategy to uphold ethical standards and secure investor trust.



Key Resources

National Centers for Environmental Information. (2022). Billion-Dollar weather and climate disasters | National Centers for Environmental Information (NCEI).

Bank regulators step up (2023, October 30). Green America.

Martinez, R., Goldblum, C., Hales, D., Monaco, M., Sthankiya, U., & Rutang Thanawalla. (2021, December 10). Embedding climate risk into banks’ credit risk management. Deloitte.

The Fed – Supervisory Letter SR 12-17 / CA 12-14 on Consolidated Supervision Framework for Large Financial Institutions (2012, December 17). Federal Reserve.

Simon-Kucher & Partners. (2021, October 14). Recent Study Reveals More Than a Third of Global Consumers Are Willing to Pay More for Sustainability as Demand Grows for Environmentally-Friendly Alternatives. Business Wire.

Hunt, D. V., Yee, L., Prince, S., & Dixon-Fyle, S. (2018). Delivering growth through diversity in the workplace. McKinsey.

Diversity matters even more: The case for holistic impact (2023, December 5). McKinsey.

The state of diversity in global private markets: 2022 (2022). McKinsey.

Capturing the Diversity Benefit: Workforce Diversity Linked to Financial Performance. (2023, November 28). As You Sow.

Sustainable Investing: 10-Year Outlook (2023). Morgan Stanley.

Green America Submits Letter for the Record to House Committee Ahead of Anti-ESG Hearings (2023, July 12). Green America.

Sustainable Funds Beating Peers in 2023 (2023). Morgan Stanley.

New Poll: House GOP’s Anti-ESG Push to Blindfold Investors Is Deeply Unpopular, Even Among Republicans. (2023, December 14). Public Citizen.

DOL Final Rule on ESG Factors to Take Effect The Final Rule clarifies the application of ERISA’s fiduciary duties of prudence and loyalty to the selection of plan investments that incorporate ESG goals. (2023).

European Commission. (2023). Corporate sustainability reporting. European Commission.