Since the COVID-19 pandemic, businesses are increasingly more aware of the impact that social responsibility and climate change has on the longevity of their organizations. As a result, ESG (environmental, social, governance) reporting is becoming more commonplace as consumers and investors alike seek more holistic views of the organizations where they are spending their time and money. This demand for transparency and consideration through ESG reporting is reshaping the corporate landscape, pushing organizations to rethink their practices and integrate sustainability into their core operations. For aspiring leaders, understanding and implementing ESG frameworks isn’t just an advantage—it’s essential.
The growing importance of ESG
Over the past decade, ESG has become a defining feature of successful corporate strategies thanks to its consideration of environmental risks, employee welfare, and governance transparency. In fact:
- 90% of S&P 500 companies release ESG reports
- ESG-focused institutional investments are projected to reach $33.9 trillion by 2026
- Investment funds with adherence to ESG principles hold more than $18 trillion
- ESG considerations are considered by 89% of investors when making investment decisions1
ESG initiatives show a business’s long-term commitment to success. For example, Apple has long been associated with product innovation but are now innovating beyond product design with their commitment to become carbon-neutral across their entire business, manufacturing supply chain, and product life cycle by 2030.2 These actions help position organizations as leaders in the environmental space and set the example for combatting environmental and climate change challenges.
Environment and climate change: The business imperative
Climate change and business impact are now inextricably linked. Businesses that fail to adapt to environmental challenges risk reputational damage, regulatory penalties, and financial losses. Circular economy business models—which emphasize reusing resources and minimizing waste—offer a promising pathway for companies seeking to reduce their environmental footprint.
The social and governance dimensions of ESG
While environmental factors often dominate ESG discussions, social and governance elements are equally critical. Companies have shifted their focus to more equitable hiring practices, increased community engagement, and ethical supply chains. For example, Patagonia’s commitment to fair labor practices and social responsibility exemplifies how businesses can align profit with purpose.3
Governance, too, plays a vital role. Strong governance practices ensure accountability and transparency, fostering trust among stakeholders.4 Businesses with robust governance structures are better equipped to navigate crises, attract investors, and sustain long-term growth.
Building a sustainable future
As businesses face mounting pressure to address environment and climate changes, leaders must be equipped with the knowledge and skills to navigate these challenges. Presidio graduate programs at University of Redlands include two unique degree programs in sustainable solutions: our MBA and our dual MBA/MPA. These master’s programs focus on developing business leaders who can balance profitability with purpose and leverage ESG frameworks to drive innovation. Apply today to join our supportive, purpose-driven community, and discover how you can make an impact as a sustainable business leader to help create a better future.