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ESG Criteria Pushing Corporations to Focus on Stakeholder Return

Written by:

Christina Cuppari

“Fifty years after Nobel laureate Milton Friedman famously declared that the sole ‘social responsibility of business is to increase its profits,’ corporations are abandoning the dictum.”

Barron’s recently came out with their ranking of the 100 Most Sustainable Companies so far in 2021. Why were there 28 new companies added to this recent list compared to past ones? The answer is an increase in pressure for companies to report their stakeholder return. As a new metric for investors to analyze specific industries, ESG criteria is a growing driving factor of organizations’ short and long-term investments and decisions.

"Institutions such as Business Roundtable...are pushing corporations to report on how they take care of all stakeholders- including their employees, customers, local and broader communities, and the environment.  Not just shareholders."

The top-rated organizations took part in favorable actions such as increasing their workers’ pay to $15 early in the pandemic, created programs to attract women and people of color to their workspace, and donated sanitation and other hygienic products to local communities.

I believe one of the hardest changes for corporations will be regarding the impact that individual and whole industries have on the environmental. Prioritizing relationships with suppliers and having product transparency with customers is integral in working towards a cleaner world.

Read about the extensive process and components that went into Barron’s rankings: https://www.barrons.com/articles/these-companies-rank-best-on-social-criteriaand-could-reward-investors-51593215993

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