How ESG issues become financially material to corporations and their investors
Why ESG Can No Longer Be Ignored: A Wake-Up Call for Corporates and Investors Alike
There’s a quiet revolution happening in the world of business and it’s not just about profit margins or quarterly returns. It’s about ESG Environmental, Social, and Governance issues and how they’re reshaping the way companies operate and how investors assess value.
For years, ESG was treated as a “nice-to-have” a soft, peripheral consideration. But today? It’s become a strategic imperative.
A groundbreaking paper by Harvard Business School’s David Freiberg, Jean Rogers, and George Serafeim dives into exactly how and why this shift is taking place. And here’s what makes their insights so compelling: they don’t just argue that ESG matters they show how ESG becomes financially material to companies and investors alike.
From CSR to CFO
Thousands of companies worldwide are no longer just talking about sustainability they’re operationalizing it. They’re measuring, managing, and reporting ESG performance with the same rigor once reserved for financial metrics.
We’re seeing the rise of the Chief Sustainability Officer (CSO), no longer a symbolic role, but a strategic one tasked with embedding ESG into core business operations. Targets are being set on everything from carbon emissions and circularity, to diversity, equity, and safety because these aren’t just ethical issues; they’re financial risks and opportunities.
Investors Are Taking Note
On the other side of the equation, investors have evolved. What began as niche “socially responsible investing” has become mainstream. Institutional investors, asset managers, and pension funds are now integrating ESG into their risk models and portfolio strategies not out of idealism, but realism.
Why? Because ignoring ESG today is like ignoring credit ratings or market trends it puts your capital at risk.
Poor environmental performance? That’s a potential regulatory fine or stranded asset.
Weak social practices? Think workforce unrest, brand damage, or lost talent.
Governance lapses? We’ve all seen what one scandal can do to a stock price.
What This Means for You
If you’re building a career in ESG or sustainability, this is your moment. The demand for professionals who can bridge the gap between impact and finance is exploding.
If you’re leading a company, this is your reality check. ESG isn’t a side deck it belongs in your boardroom.
If you’re an investor, this is your lens. Long-term value now walks hand-in-hand with ESG performance.
This powerful paper by Harvard Professors Freiberg, Rogers, and Serafeim is a must-read for anyone navigating this new era of business. It explains not just the “what” of ESG but the “why” and the “how.”
Because ESG is no longer optional. It’s material financially, strategically, and reputationally.
And the companies and investors who get that? They’re not just doing good.
They’re doing well.
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