The Business Case for ESG Strategy

ESG reporting will soon be required, but that's not the only reason to create an effective strategy.


Today, many organizations understand why sustainable transformation is important for our planet, but they often don’t recognize the business benefits, which include cost savings, risk mitigation, and improved brand perception. Increased or new regulations for all of ESG (environmental, social, and governance) are on the horizon and will impact businesses across all sectors and industries worldwide. While the exact details of these regulations are still pending, we highly recommend taking action now to implement a strong ESG strategy, as the benefits of sustainable transformation far outweigh the risks.

At a high level, companies with a comprehensive ESG strategy in place are able to more effectively address macro external pressures, such as climate change and social inequalities, which have the potential to impact business success. On average, the potential business value of climate-related opportunities ($2.1 trillion) is seven times the cost of realizing them ($311 billion). By embedding sustainability as a core value of your business, you benefit all stakeholders: shareholders, customers, employees, partners, our communities, and our planet.

So, what does that mean for your business? In this report, we identify seven ways ESG delivers measurable business value for your organization. Then, we show you how to harness this potential to create an ESG strategy and take action.

7 Ways ESG Delivers Measurable Value for Your Organization


Sustainable business practices often reduce costs.

By being more efficient with water, reducing power consumption, choosing energy-efficient equipment, and switching to renewable energy resources, companies make big strides not only for the environment but also for the bottom line.



There are many ways sustainable choices can improve business performance and reduce costs. Almost any time companies find ways to be more efficient — with space, equipment, materials, packaging, time, and so on — they’ll see lower costs as a result.

Take the transportation industry, for instance. One of its biggest expenses and sources of carbon emissions is fuel. When a transportation company uses less fuel via sustainable transformation, they save money, reduce emissions, and become more environmentally friendly.

Across all industries, recycled water and energy-efficient lighting can reduce spending overall. By using recycled water for industrial processes or landscaping, businesses can lower their water bill. Similarly, energy-efficient lighting lasts significantly longer than traditional lighting and requires less electricity to operate, reducing energy costs.

By analyzing each link in the value chain, companies can accurately identify sources of waste and explore sustainable alternatives. Making these eco-friendly changes to business processes cuts down on unnecessary waste and boosts operational efficiency, lowering costs in the long term.


ESG reporting mitigates risk and drives compliance.


All over the world, climate disclosures and ESG reporting regulations are becoming mandatory or more stringent. This is because climate-related risks are real, and they affect businesses in two ways. First, there’s the physical impact of weather-related disasters and rising sea levels, which can negatively impact a business’s supply chain, workforce, distribution channels, and so forth. Second, there’s the risk that comes with transitioning (or not transitioning) to a more sustainable, lower-carbon economy. As the market becomes increasingly sensitive to carbon footprints, demand for lower-carbon products and services could increase, escalating risk for companies with high-carbon offerings. It’s important to note that this market goes beyond customers: Employees, investors, suppliers, and partners are all taking a close look at ESG metrics and favoring companies that are both transparent in their reporting and taking action on environmental and social issues.

While both of those types of risk are very real and worthy of any business’s attention, the most immediate risk is one of government compliance. After the proposed SEC ESG rule amendments are implemented, every publicly traded company in the United States will need to report on emissions with a similar level of rigor to what is expected in financial disclosures. Abroad, the European Union Parliament recently adopted the Corporate Sustainability Reporting Directive (CSRD), requiring all large companies that do a large amount of business in the EU to disclose data on their impact on people and the planet and the sustainability risks they are exposed to. In the United Kingdom, there is now guidance for companies and limited liability partnerships to understand how to meet new mandatory climate-related financial disclosure requirements.

Even though these laws are geo-specific, they will apply to businesses worldwide. To remain compliant, satisfy investor needs, and mitigate risk to future business value, organizations must face these new regulations head-on, ensuring accurate and transparent ESG reporting.

Upgrading technology can help organizations monitor ESG progress and build insightful reports quickly to align with reporting requirements. Salesforce’s Automate ESG Reporting solution, which is built around Net Zero Cloud, helps organizations automate the ESG reporting process. It offers framework-specific wizards, such as CDP and GRI, that walk users through creating an ESG report according to each framework. As the details of the reporting structures required by the SEC or under the CSRD become known, this solution will add or adapt its wizards to help organizations with their compliance.

The largest 215 companies alone report over $1 trillion in climate-related risks.
Salesforce proactively identifies regulatory risks in its filings with the SEC. A regulatory risk is the effect that regulation changes could potentially have on your business, industry, or market. This level of transparency demonstrates to our stakeholders that we consider climate-related risks to be critical for business decisions.

Transparency builds trust.


Transparency is becoming increasingly important up and down the value chain. Stakeholders are showing increased interest in sustainable businesses. Being able to transparently share all ESG data, which includes scope 3 emissions, is a competitive differentiator that has the potential to drive increased business to organizations that report regularly.

Scope 3 emissions comprise the emissions not in your company’s control and includes those of your suppliers, distributors, partners, customers, and more. This makes them very challenging to track. However, scope 3 reporting is necessary for companies who want to report on their carbon footprint, and soon it could be required to stay in compliance with government regulations. Regardless of how the regulations pan out, reporting on ESG metrics for your entire value chain allows you to meet stakeholder demands while building trust in your company.


Canadian technology company TELUS taps Net Zero Cloud for emissions reporting.

TELUS, a leading wireless service provider, turned to Salesforce to understand emissions across its entire value chain and provide stakeholders with investor-grade carbon accounting that is accurate, compliant, and transparent. As reporting grows increasingly complex and detailed, companies need to find accurate, real-time, automated systems to manage the data. With insights from Net Zero Cloud, TELUS has since identified science-based targets and a path to net zero. Read more here.
By publicly announcing goals, engaging with partners and suppliers, and reporting on progress, your company can strengthen confidence and trust from key stakeholders.

Sustainable transformation drives innovation.

Transitioning to sustainable business practices can spark innovation, which can result in new products and services, smarter, more efficient ways to approach tasks, and more interest in and demand for your offerings. Put simply, sustainability goals can lead to more innovative thinking, which can have tremendous benefits for all areas of your business.

Innovative thinking can manifest in various climate-related opportunities. For example, a shipping company may want to reduce the number of trips it needs to make on a particular route. After realizing it often ships with empty space in freight trucks, the company invests in a unit-load optimization tool to ensure its trucks are packed without wasted space. This reduces trips, which saves on both emissions and costs. Investing in sustainable transformation allows companies to discover more efficient ways of completing standard business processes.

In addition to operational efficiencies, innovation can come from new products and services. At Salesforce, for instance, we needed an accurate and auditable single source of truth for managing our environmental footprint across scope 1, 2, and 3 emissions, so we created an app for our own use. Eventually, this became Net Zero Cloud, which provides our customers with the same level of sustainability management as Salesforce. Now, it’s exciting to see other companies adopt this tool and use it — not only to see progress made on their sustainability journeys, but also to see how they’re accelerating their stakeholders’ path to net zero as well.


MillerKnoll uses data to design a more environmentally conscious future.

At MillerKnoll, a collective of global design brands, two directives guide every decision the company makes: Be good stewards of the earth’s resources, and ensure each product and experience is exceptionally designed. By prioritizing eco-friendly materials and processes across its entire product portfolio, MillerKnoll brands innovate high-quality, responsibly designed products. By 2030, MillerKnoll plans to use 50% or more recycled content in its products.

Additionally, MillerKnoll works to convert spend data into total carbon dioxide output to track and manage carbon emissions. This means that the company can quantify how each product it develops directly impacts carbon output. With sustainability, commerce, and service data under one roof, MillerKnoll can rally its customers and partners to champion responsibly designed products. You can read more about how MillerKnoll computes its carbon impact here.


Purpose-driven values help recruit and retain top talent.

Employees want to work for purpose-driven organizations. Roughly eight in 10 employees report being happier if they feel a sense of purpose and belonging at work. We consistently hear that our sustainability and social responsibility leadership is a key reason people choose to come work for Salesforce.

Approximately 40% of millennials have chosen a job because the company performed well on sustainability. This same survey reported nearly 70% of respondents said that if a company had a strong sustainability plan, they would be more likely to stay with that company. Prioritizing sustainability is a highly effective way to engage employees, especially when every employee has an opportunity to help the organization achieve its sustainability goals.


Sustainability leadership differentiates the brand.

Demonstrating sustainability leadership on third-party indices has a meaningful impact on a brand’s strength in the market. In fact, roughly 66% of consumers will pay a premium when a company is committed to social impact.
Brands that scored highest on sustainability also generated five times the revenue growth of companies scoring lowest, according to a Bain & Company survey of more than 8,000 European consumers and over 60 brands across eight consumer goods categories.

ESG initiatives increase capital access and market value.

Now more than ever, investors want transparency and action, and they seek out companies with solid ESG credentials. ESG initiatives have been shown to both protect downside risk for investors during turbulent economic times and increase financial returns over extended time horizons.
Creditors lend at lower rates to companies that successfully achieve ESG goals and demonstrate progress in reducing CO2 emissions and water consumption.
According to PwC’s 2021 Global Investors Survey, 79% of investors consider ESG risks and opportunities an important factor in investment decision making.

How to Create an ESG Strategy

Now that you understand the business value of sustainability, it’s time to make the case for your company. Whether you're part of a small business or a multinational corporation, sustainability can both drive value and reduce costs for your organization. By using the seven benefits listed here, your business case can offer ways for every leader, function, and team to benefit from tangible sustainable business practices. This will lead to additional buy-in for your vision.

Once you have sufficient buy-in, you’ll need an ESG strategy. Your strategy needs to address all areas of ESG — environmental, social, and governance. Here’s a quick breakdown of what that means:

Environmental — encompasses such issues as climate change and greenhouse gas emissions, biodiversity loss, natural resource scarcity, water management, waste management, and energy usage..
Social — pertains to diversity, equity, inclusion, human rights, labor practices, supply chain management, political movements, culture, safety, training, product safety, and data security.
Governance — refers to how companies conduct their business, staff and govern their boards, compensate executive management, hold executives accountable, deploy and enforce policies, and publicly disclose relevant company data.

Then you’ll need to execute on that strategy and accurately report on ESG metrics — all while still cutting costs and realizing more efficient ways of doing business.

Balancing all of this while understanding and navigating the complexity of ESG reporting can be challenging. But with the right tools, you can manage ESG data in real time, streamline the reporting process, and become more efficient as a result.

One way to do this is with Salesforce’s Automate ESG Reporting solution. This solution integrates data from disparate systems, tracks progress in real time, creates intelligent insights, and generates accurate and complete reports that align with voluntary reporting frameworks. Automate ESG Reporting combines the best of Net Zero Cloud, Tableau, Customer 360, AppExchange, and Salesforce partners to gather environmental, social, and governance data into a single source of truth and automate the reporting process.

Improving your technology allows you to expand reporting capabilities and align to global standards as ESG regulations and climate disclosure rules roll out. The time to act is now. Seize the moment for ESG reporting, address compliance needs, and grow your business value — all while reducing costs and increasing productivity.


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