What are the sustainability topics with the most financial impacts for private firms?
Bain & Company and Ecovadis evaluated more than 100,000 companies worldwide - most of them private - on their sustainability efforts, targets and results. They observed:
- Firms carrying out ESG activities showed encouraging revenue growth and EBITDA margins, and no negative correlation with financial outcomes. Overall, companies with high ratings in the Social pillar tend to yield better financial results.
- Companies with the happiest employees show 5% higher revenue growth than those with a less-satisfied workforce.
- The use of renewable energy helps companies hedge against fossil fuels prices and lowers their carbon taxes, leading to higher EBITDA margins.
- Firms with strong sustainable procurement focusing on their suppliers' ethics, environmental and labour practices get up to 3% higher margins.
- Companies in the top quartile for executive gender diversity get 2% higher revenue growth and 3% higher EBITDA profit margins than those in the bottom quartile.
The gradual implementation of the CSRD and the ISSB reporting standards over the next few years will likely bring more granularity and comparability on ESG topics to assess their correlations with financial results.
Based on this report, we can expect to find richer and more nuanced evidence of the relationships described here.