Can ESG Really Boost Profits?

Hey everyone, welcome back to our weekly LinkedIn Lives. Today we're going to be talking about if ESG really boosts profits and how it can really boost profits because, you know, I kind of gave you the answer right there, right? So I'd like to welcome you again and I would like to quickly introduce myself. I'm Claire Hayek. I'm the founder and CEO of MSP Team Building. I'm also a team leadership expert. And recently, I got my certification as a neuroscience coach. Just wanted to celebrate that with you. And joining me today is Lisa Annabelle Ellis, a sustainability leader and an expert in ESG strategies. Welcome, Lisa.

Thank you, Claire. I'm excited to be here today.

How are you?

I'm great. And yourself?

I'm very good. Actually, I've been waiting for this one. I mean, Lisa, you know, every time I hear you talk about ESGs and SDGs, I'm just completely amazed. And I'm always like, tell me more. It's always very enlightening. This is why I really wanted you to join me live so we can share and add value to our listeners that are maybe wondering, you know, kind of trying to demystify this whole thing about ESGs and SDGs. And some people just don't even know what it means. And some just going, is this really applicable to me? And is this really relevant to my business? and my team and my culture, my company culture. But before we dive in, I'd like to just take a minute to ask everyone to share in the chat where they're joining us from, from what side of the world. So, please do share your location. I am here in Lorraine, Quebec.

Lisa? Yeah, I'm in Toronto right now.

You're in Toronto. I know you were traveling in the very last—

I was in Atlantic Canada. So yeah, I'm back in Toronto. I'm based in Toronto. And first, I'd like to introduce myself. I've been involved in the space, I guess I would call myself the OG. I've been doing this for over 20 years in different iterations. ESGs, social development goals, all that stuff I've been involved with throughout my entire career. But most recently in 2020, I opened my own ESG advisory firm.

Awesome.

And we help— we're a boutique consulting firm. We have 8 people. And what we do is we support companies across North America with their ESG initiatives and/or sustainability. And we're very pleased to see that like these companies that are hiring us, they want to boost profits. And so when you reached out to me and said, and it's all about, at the end of the day, it's all about money, right?

Well, yes and no. Of course, you know, when we're in the business, we're in the business of making money. Nobody works for free, right? However, it's all about also adding value and trying to make a difference, I think. And I know you're going to be telling us a bit more about that. The idea, I think, I kind of wanted to— my team and I wanted to come up with a title that is appealing because as leaders, as business owners, CEOs, founders, you know, we need to thrive. We need to make sure that our company is profitable. So profit is a big deal. It is about making money. However, when ESG and SDGs were kind of imposed, right, by the UN. So It kind of just, you know, I think it's establishing some kind of ethics and how we do business and how conscious we are about things that we can do to make business more impactful, our business more impactful. So that's the way I see it. But hey, I'm not the expert. But before we dive right in, Lisa, I just want to share a couple of the locations here. There's a— we got Connor from Montreal. Connor, by the way, everyone, is on our team and he just moved to Montreal from the US. I'm ecstatic, and Connor will be sharing a lot of stuff in the chat. We'll be sharing some some some information. We got Courtney from Washington. Hey, Courtney! John from Greenville. I was there last week, and I did meet John. Great guy, very knowledgeable. Brian, Brian, thank you for joining us from North Carolina. Donna from Fort France in Ontario. We got people from Branton, Gonor, and more people from Montreal. Hugues, bonjour. And somebody from Ottawa. So thank you, thank you, thank you. We're very excited to have you. And so here we go. Now, just quickly here, we're going to be sharing polls. Please do interact. Please do use the chat. This is an interactive LinkedIn Live. We only have 30 minutes, so I'm just going to get right to it. And I'll be sharing— we'll be doing Q&A at the end. So if you have questions all along, please do add them in the chat. I will basically rewind in the chat and make sure that we answer your questions. But we will We will do that right at the end. So please do stay till the end, and I'll be sharing some information as well about our upcoming webinar, as well as a great, great conference also that we're doing next Wednesday. All right. So Lisa, tell me first things first. Can you briefly explain ESG? What is ESG? What it means, and the SDGs, right? A lot of people are confused about that.

So.

Please do help us with that.

You bet. I'm so happy to see that there's so many people from across North America on this call and good for these folks for taking a little break in their day or maybe they're still working to actually soak up and learn because I think that's the most important thing. The difference, I guess, great questions. There's a lot of acronyms being thrown around there and people are saying, well, maybe this is a nice to have, but actually it is a must-do. This is the SDGs. I'm wearing the pin. There are 17 United Nations Sustainable Development Goals. And they've been put together to focus on more of the people and the planet. For example, a lot of companies, they pick of the 17, they pick a few of them, perhaps climate action or gender equality, those sort of things. So that's one framework. And that's, I think, is a global framework. And I think if any company is looking to get started in their ESG or sustainability journey, that's a really easy opportunity for them to get familiarized with the United Nations Sustainable Development Goals.

Right.

And then pick perhaps, you know, 2 or 3 that resonate with their organization and align their business goals with those, for instance. But ESG is— and as an ex-banker, and I, again, I started off and I lived in the US, and I know that at the end of the day, you know, businesses are in business to make money, and organizations don't want to go bankrupt. But the beautiful thing about ESG and business is there's an amazing convergence in that the better that you do from an ESG perspective, the better your business will do. ESG is a, you know, call it whatever you want, is sustainability. ESG, there's 3 letters, and I apologize, I know probably everyone who's dialed in here knows. It's environmental, social, and governance. And this is an investor sort of term that kind of was coined as a way to help people understand the different factors that they need to consider from an investment perspective. And under environmental, things like water, greenhouse gas emissions.

Right.

Under S would be things like, as I said, gender equality, human rights. And under G is your governance. And, you know, some would argue the E is, you know, very, very much in the headlines.

Right.

But we can't ignore the G, which is governance. And governance is keeping everything together. And that's your board board of directors, that's your leadership team. Those folks are the ones that are keeping score and tracking what needs to happen. And ESG, you know, it was kind of thrown around during the, you know, the pandemic. It became, you know, a hot button issue a couple of years ago. But I'd have to say, Claire, that when you initially approached me, I kind of said, I don't really want to talk about ESG in particular, because we know, in speaking with my colleagues in the States, it's become somewhat of a not as popular of a term. There's been a bit of pushback. And Claire, you and I were in a meeting with—

Yeah.

A CEO from— who is in Florida. And he said that no one talks about ESG anymore. And that's unfortunately because some of the oil and gas companies have experienced some pushback on their— what they're doing. And so they're anti-ESG. But, you know, call it whatever you want. It is the right way to do business. And I don't see it going anywhere. And it's going to be those companies that adopt the ESG principles and adopt ESG strategies and ESG way of working are going to be around for the long term.

That's great. It's kind of like I want to do a parallel with AI, which will be our subject, by the way, how you can make your team more productive by using AI in 2024. Everybody's talking about AI and everybody's saying either you get on board or you're just left behind. So let's get right in here. So again, companies are still unsure. whether ESG can actually boost profits. Okay, so Lisa, can you please share some insights on the financial impact of ESG strategies and why they are becoming increasingly important for businesses today?

Yeah, you bet. You bet. And on the topic of AI, though, I also see the intersection of AI and ESG.

Oh, yes.

And I think so. I think for those leaders that are listening today, I think if you're not soaking up as much as you can around how to integrate AI and ESG into your organization, your organization won't exist in the future. So one, yeah, to answer your question, yeah, there is a lot of financial benefits to adopting this ESG lens. And I'm going to talk about it from a stakeholder perspective. Now, if we think about, you know, who are your stakeholders for your company? Well, let's start with your customers. Your end customer is interested in working and transacting with companies and organizations that are doing the right thing. So at this point, it's voluntary. Some companies are doing the right thing, and companies are experiencing a bit of an increase in business and potentially an increase in premiums of their prices.

Right.

But one thing I have to say is there's a fine line between saying you're doing something and actually doing something. So there's a bit of a nervousness around greenwashing. So I would recommend for leaders to make sure that you are actually doing what you say you're doing and to make sure that you have verifiable proof to back it up. And we've seen organizations— I'll go back to the oil and gas sector, the Pathways Alliance. They were notorious for saying they're doing all this great stuff. And then as soon as the greenwashing rules came into effect in Canada, which was a few months ago, they actually wiped their website because they recognized they were greenwashing. So first reason is customers want to do business with companies that are doing the right thing.

Right.

The second is the regulators. Right now, there are— there's a mix of different regulations. I was talking to a company yesterday, and I was so pleased to hear that they've adopted some human rights policies and anti-child slavery policies, and that falls under the S. So there's regulations that are forcing companies to be compliant or fit with the ESG framework in some countries. And that also goes for the E. There's some regulations around emissions And then the G, right now we're seeing, for example, the SEC in the US, they're mandating some of these reportings. So that would be the governance perspective. So in addition to customers, you have regulators, you also have employees. So I'm a Gen X, but I work with a lot of Zeds and, or Zs if you're in the States, and Gen, and the Millennials. And I would say that this is becoming a table stakes issue. Companies don't want to work with an organization that's just there for profits. They has to be a purpose.

Right.

And a purpose is a way of retaining young— younger staff, attracting younger staff, and keeping them engaged and interested. So a purpose, it has to be purpose and profit that actually go hand in hand. So that's your third stakeholder that I would say is very important. In addition, I'd say governments. In addition to regulators, governments are becoming, even outside of the private sector and the public sector, governments are adopting ESG frameworks. And then I think this is, you know, global bodies, and I can name the alphabet soup, but for the people that have tuned in today, I'll spare them. But there's a lot of regulatory frameworks that are converging, which is the good news.

Right.

So for many years, there were so many— TCFD, SASB, CRD— like, there's way too many. But the good thing is they're all converging. So I think at the end of the day, we're going to have potentially one or two global frameworks. And then And the best thing, I don't know if there's any accountants on the line here, but we do see the convergence of financial reporting with non-financial reporting, which is awesome. So what that means is there's going to be a whole new level of rigor in reporting. So this will be applicable to public companies. Private companies I actually see are the most excited about ESG because they're not focused on just the next quarter or the next quarters.

Right.

They're thinking about 5 years down the road. And so those companies are just awesome.

Okay, so let's pause right here. Thanks for that. We're gonna— in my next question, we're gonna go a bit more in real-world examples, you know, literally just get, you know, more specific. But before we do that, I just want to share a quick question here and basically get your insights. So people that are with us here today, if you just joined us, please do share in the chat. Do you believe that implementing ESG strategies can positively impact your company's financial performance? Yes or no? Easy yes or no. Please do put it in the chat and we'll be back to see what everybody thinks here that are joining us today. Actually, I'm just gonna scroll right here and see. Please do put it in the chat. Yes or no, do you believe that it could be profitable, financially profitable for you to implement ESG strategies? There's a couple of yeses. And we'll wait to see what everybody else thinks in here. I think my feeling is that people are here with us to really learn a bit more about it. So we'll help you answer that question as I tackle the next one. Basically, Lisa, you're pretty much deeply involved in ESG initiatives. What I really want to share today, and again, Time is flying. So briefly, if you can walk us through some actual real-world examples where ESG, in your experience, where ESG has driven profitability and sustainability, and maybe share also what are the key factors that make ESG a powerful tool for long-term business success. So if you can share the actual real examples where you've seen it really drove profitability with clients of yours, and those key factors that make it a powerful tool.

Thank you. Yeah, yeah. So at YOLOYOLO, which is my boutique consulting firm, we've had the pleasure of working with a wide range of companies from manufacturing to construction to mining to energy. And I was—

Sorry, have you also worked with tech giants?

Yes.

Tech companies as well, and education, health, health and wellness. I mean, you know, health Healthcare, etc.? I'm just curious.

Education, nothing in health and welfare yet. But, you know, our niche, I would say, is manufacturing, mining. We have done some tech and energy.

All right.

But we'll help anyone that is in need of support.

It's not basically that. I guess I just wanted to know, like, it's not about your experience, but it's more about this could be applicable to any industry pretty much, right?

Exactly, Claire.

Exactly right. Depending on whether they want to push the E, the S, or the G, depending on their goals, right? So, okay, give us a quick example.

Sure, sure. So I would say implementing these strategies from what we've seen firsthand is we were approached by companies that were losing bids. For example, they were involved in an RFP process or a tending process, and the multinational that was engaging with this company asked them specific questions around something that fell under the E or the S or the G. And they were losing money because they were not winning these sometimes multimillion-dollar contracts because they were unfortunately not yet advanced in their ESG strategy. They had not even started. And they kind of dismissed it as a checkbox exercise. When we were called in, we quickly looked around. We had a quick meeting with the senior leadership team and then with some managers. And we were delighted to see that they actually had the foundational pieces already within the organization. But it took us coming in to work across the silos to kind of gather those elements of what they were already doing and putting it into a coherent strategy. And then from there, we were able to help them prioritize some of their business priorities too. But how it helped them drive profits is they were able to win these bids. And on top of that, they're able to charge more money because they had that ESG halo. And companies like—

I like that. I want to pause there. No, but these are gold nuggets. And it helps us understand because, I mean, obviously you do this every day. But I like this term ESG halo.

Yeah. And I hear from—

You develop that, right, as an organization more and more, right?

Okay. No, but I hear from leaders, from C-suite leaders all the time that obviously the bottom line is the most important, especially these days with the headwinds that we're feeling with interest rates and all sorts of the wars that are going on in the world. But at the end of the day, these enlightened leaders say they will do this if it brings value to their organization. And not a single client has said to me, this doesn't bring value. Claire, I want to focus, in addition to profits, it manages the risk. And risk management, if you're a CFO, if you're a CEO, if you're a senior manager, wherever you are in the organization, you always need to put on that risk lens.

That's right.

And that will— and going through this exercise of putting together a coherent ESG strategy enables organizations to kind of like identify their blind spots or identify where they're missing out. And consistently when we do peer benchmarking of our clients after we've worked with them, we realize that they're gaining a little bit more. They're getting more clients, they're getting more, you know, lower employee attrition rates. They're ahead of the regulations. And so—

Right.

If companies are going to wait for all these regulations to come in and all this mandatory reporting to come in, it's going to be super expensive. But those companies that are ahead of the curve and jumping in and putting their toes in the water, and I would also say that from a risk perspective, if we think, I'll take an example just because we like the mining sector, Claire. If we think about there was a mine in Panama and they, under the S, they unfortunately failed to engage with, it was a Canadian mine, they failed to engage with the community, the local community.

Right.

And so the ESG strategy is your social license to operate. You need to certainly be a good citizen before the local community will accept you. you as a good employer, a good supplier. And these, all of these companies that we're working with are essential for the supply chain of the world. If we're thinking about the climate crisis, like, we need these companies, we need the energy companies, we need the mining companies, construction companies, the wellness companies, the technology companies. We need these companies to transact and we need them to be around for years to come for the next generation.

Yes.

So we need to think now, what can we do to make sure they're sustainable for 3, 5, 10 years down the road? Not just thinking about the profit. Future ready.

Yeah, future ready. So in a nutshell, from what I understand, if I can summarize, so this increases your chances to win bids because you're pretty much meeting all the specs or the requirements. It can also help with employee retention, building a culture that is purposeful, as well as I believe, I think in the US, there's a It's a big tax break, I believe, also, right, for organizations that are diverse, that have a lot of diversity, diverse suppliers, etc. I don't know what the numbers are. I think it's 5%. They need to have 5% diverse suppliers in order to meet that tax credit or tax saving. But that also kind of goes into S, right, when it comes to diversity, equity, you know.

Inclusion. Exactly.

Inclusion, DEI, basically.

Yeah.

Okay, this is great. So let's go on to the next question here for everyone. So please do put it in the chat. Which area of ESG do you think has the most potential to boost profitability? And obviously, this will probably be relevant to your industry, to your business. Please do share. Do you, in your opinion, is it the environmental, the E, the S, which is social, or governance? And while people are sharing that in the chat, I'd like to go quickly to the last question because we have now 2 minutes for this one, Lisa. And I know I'm asking a lot of you, but it's 30 minutes. So obviously a lot of companies are excited to embrace the whole ESG thing, right? But they just don't know where to start. So if we can just share like an outline or share with us some practical steps for businesses that, you know, they're looking to integrate ESG principles into their operations, like what steps can they do very quickly? Like at least do this, that's the first step, second, third. And also if you can also tell us how can companies align their goals with ESG and measure their progress, right? Because I think measurement is a big, big, big thing from, from the ESG adoption.

Yeah, great question, Claire. I think every company is different. There's no one-size-fits-all. So I think what would be applicable, though, to everyone is to do a materiality assessment to better understand what is important to your, to the stakeholders of each organization. So what's important to a mining company may not be interesting to a medical company. And then once they understand, and I guess to your previous question, like which area of ESG has the most potential to boost profitability, depends on the sector. In some sectors, it's the S, in some sectors, it's the G. I know talking about profitability, I know that banks will sometimes lower the cost of capital. I know that the share prices will be rewarded sometimes when they have these ESG processes in place. But yeah, after the materiality assessment, I think it's a matter of bringing the key stakeholders into the room. I always like to the CFO or the accounting person in the room because we need the financial metrics.

Right.

And I think at the end of the day, Claire, I think it's always very important to take a baseline assessment where we're looking at the P&L, the balance sheet of every company to see what's going on. A lot of these initiatives can, as you mentioned, the tax breaks for diverse employers. But we've uncovered some opportunities for our clients to make money. by doing this work. So I'll give you a quick example of one organization. They wanted to put in EV chargers. We identified ways for them to make money from the carbon credits. So they were tickled by that initiative because not only are they saving the planet, but they're saving some money. So it's a win for everyone. It's a win for the planet. It's a win for profits. So— Okay. All right. If they're really stuck, they can— they could certainly give us a call. We'd be very happy to have a complimentary consult with any organization that is in need of some additional support.

Yeah, and I just shared and I will share it again. If you need more information about ESG, basically this topic and Lisa, what Lisa can do and help you with, please do type ESG in the comments and we'll send you the information. Otherwise, you can reach out to me directly on LinkedIn. We'll be happy to connect you directly with Lisa and her team. Just sharing here the chat quickly. We got some of the answers we got, you know, on our previous question, actually the question that is showing right now. We got basically social from Donna, governance, environmental, more governance and governance. And here Courtney shared that the E is the easiest one because of its direct link to the company's operation. S has gotten significantly less attention because it's often harder to connect directly to profit lines. Very interesting insight, Courtney. Thank you.

Thank you.

you all for sharing, basically replying in our chat. So let me ask you one last thing. We have 11:56. Crazy how time is flying. So what's the biggest challenge your company faces in implementing ESG strategies? I'll give you some examples, but please do share other ones if ever that these are not applicable. Lack of resources, knowledge, or support. And I will start by answering that one. for us is lack of resources, really. And which brings me to quickly here, as people answer in the chat, Lisa, is this relevant to small companies? We're a small business. I mean, we're across Canada and the US, but we're small staff-wise, and we do a lot with partners like you and experts in the field. Would a small company— is there like a size of company where people should start looking at it, or should be more focused on, even if it's a small company, but I want to get get on these bids and I want to really be, uh, have that visibility. It doesn't matter what size, just do it kind of thing. Um, what do you, what do you recommend? Uh, again, we'll wrap up with that one and, and, uh, get on to the Q&A.

The return on investment is, is pretty high. It doesn't matter if you're a company of 2 people or a company of, of 200,000 people. Uh, it's, uh, the ROI is high and I'll tell you why. Um, no matter what you're doing, be it a grant application, be it, uh, writing an RFP or trying to attract customers. I would say the difference is the level of sophistication of the ESG strategy. Obviously, the more public companies and the bigger companies have to have a lot more rigor involved. And I'd say the smaller companies, perhaps it's a lighter lift, but it's a great way, a great thing to have in place. You know, Claire, I'd I relate this to, for example, health and safety. But back in the day, people didn't really have health and safety policies documented. And now today it's table stakes. And I see this is going to be table stakes in the future. So it's just a matter of companies jumping on board or getting more engaged in this. They're going to save money with this. And that's the other way how you can increase profits. When they adopt circularity principles, when they move to lower energy efficiency pieces to reduce their emissions, it's a real— Time and time again, I know I see CFOs nodding their heads saying, yes, this makes sense from a financial perspective. So let's hear from the audience. Does anyone have any questions? Yeah.

So Donna here shared that it's knowledge for them, for her company. And Hugues Saint-Jean said focus. So it's interesting. Basically for me, it was just lack of resources. So I guess all of the above in a way. We do not have any questions. Please do put your questions in the chat. I think, you know, just some people just commenting and enjoying this in the meantime. But if you do have any questions, again, uh, please, uh, type your questions in the comments. Even if you're watching the replay on this, uh, conference, I will get back to you. Uh, we're very, very, uh, hands-on when it comes to, uh, checking our LinkedIn. So again, if you want more information about this topic and about Lisa, what she— how she can help you and her team can you, please type ESG in the comments and we'll send you the info. And for all of you that registered today, we're going to be sending you— I'll be sending you a one-pager summary of what we discussed. And so, you can share it with your team. And just if you don't have time to watch the whole video, at least you have that information handy. And so, yes, I basically just wanted to wrap up here before we go. And I did want to share that we have our team leadership webinar. It's a free 90-minute webinar happening September 12th at 1 PM EST. I'm just sharing the QR code here. Please do scan it, register. Even if you can't make it, you'll get the replay only if you register. What we'll be doing— we did one August 1st, but this one is going to be slightly different and the same kind of concept, but we're going to be diving into more of neuroscience and that how That can help you as a leader and help your team. And we're also going to be sharing a lot of tools, which brings me to the next next thing. There's so much going on, so much going on. Not enough time, not enough time to share everything going on. But basically, I wanted to share that next week, voyons, blanking here. September 11th, same time, Wednesday. We're going to be talking about how AI can help your team become amazing. Okay, how we're gonna get more productive.

Yeah.

And you can also— the event is up on my LinkedIn again. You can find it in case otherwise it's easy for you just to scan this and join us. Please do register. We'd love to hear from you. And Lisa, I mean, thank you so much for basically showing up today and helping us demystify the whole ESG thing. And really excited about working with you and also excited about, you know, anybody here that have any questions about what's happening with their reality with ESG. And yeah, I don't know if you wanted to say a couple of final words here. We're over time, just one minute over time.

Good.

But yeah, just hopefully you enjoyed it as much as I did.

I just want to sincerely thank those that took the time to engage today and to listen in. I really do think that this is a wonderful tool in your toolkit for your organization. So, you know, don't hesitate to reach out to me, or you can find me through Claire. I'd love to support you and your organization, make sure that you're profitable for the long term. As I said, this is a wonderful ROI, a great way to make sure that your company is sustainable for the long term. No pun intended. Financially and environmentally, socially, from a governance perspective. And Claire, thank you so much for inviting me. This has been fun.

It was an absolute pleasure. Our ESG page will be up on our website soon. But like I said, in the meantime, please do reach out through LinkedIn. But we're trying to share some interesting information that Lisa shared with us. You know, Yellow Yellow is a major partner. And we, you know, we work together closely. And I do believe that that all ties in in a company culture, it ties into into team productivity, ties into profitability. Basically, it's the baseline. And we need to start talking about this more and more. Just sharing here quickly the chat. Connor shared the links to join our team leadership webinar as well as the next week's live. And yeah, thank you, Ganur. Just pulling up some comments. It's our pleasure. And again, thanks for joining us. See you next week.