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Doing the right thing isn’t always easy, especially for businesses. Being bold with your brand’s purpose and values may be good for your soul, but without a solid commercial return on that investment, it won’t accomplish much. One of the questions we get asked most often at Fox + Hare is, “Sure, all this sustainability talk is great, but how do we convince our finance team?”
There’s good news: you don’t have to choose between value and value for money. Consumers, employees and investors are increasingly attracted to brands that speak with confidence and act with trust, and the commercial value of ESG and sustainability is no longer just about compliance or ethics; it’s a powerful driver of business performance and long-term profits.
Here are five reasons why your brand should lean into purpose-driven values and how it ultimately benefits your bottom line.
Consumer Demand and Brand Loyalty
When speaking to customers, the message is clear: People of all ages and backgrounds are increasingly drawn to brands that genuinely care about doing good. Research consistently shows a growing demand for companies that demonstrate a commitment to sustainability and social responsibility. For example, a 2022 Edelman survey found that 64% of people choose, avoid, or boycott a brand based on its stance on social or ethical issues.
Exclusive research conducted by Fox + Hare for their insight report, “Purpose in a Pressured World,” backs this up: Nine in 10 people expect brands to focus on social and environmental responsibility in 2024, and more than three-quarters will actively seek out brands that do so as a result. These associations also influence real-world purchasing habits: 47% of people we spoke to said a brand’s purpose positively influences their purchasing decisions, and 40% would be willing to pay a higher price for products or services from socially and environmentally responsible brands.
Despite this, too few businesses are taking advantage of this opportunity to connect with their audiences. Our research shows that only 33% of people believe companies are effectively communicating their purpose, and 40% want brands to take more concrete action. For businesses that have the confidence to step into this space, there’s a huge untapped market waiting to be tapped.
Investor confidence and financial performance
The financial benefits of sustainability, ESG and purpose-driven practices go beyond customers – investors are starting to play a part too: Research from the Institute for Business Ethics shows that purpose-driven companies outperform their competitors by 7% annually, and recent research from McKinsey shows that purpose-driven brands deliver 2% higher shareholder returns than companies that focus solely on profit.
If you think about it, this makes perfect sense: Companies that think broadly about their operations, considering the impact of their work from different perspectives, are more likely to implement better risk management, find different, more efficient ways of doing things, and develop access to capital from socially conscious investors. Companies that focus only on the bottom line are subtly communicating to investors that they don’t really care about the bigger picture and may suffer from a kind of tunnel vision.
Employee Engagement and Talent Acquisition
Committing to your values means speaking not only to external audiences, but also to your internal team. Being a leader in sustainability and ESG can significantly boost employee morale and attract top talent. Who doesn’t want to work for good people?
This is especially true for younger generations, with Millennials and Gen Z (soon to make up the majority of today’s workforce) consistently prioritizing companies with strong ethics. A 2024 survey by Deloitte revealed that 44% of Gen Zers and 40% of Millennials have turned down an employer based on personal beliefs. If you want the best potential talent to work for you, you have to show them you’re committed to doing the right thing.
But this isn’t just a generational issue – it affects not just recruitment but retention: A recent Gallup survey revealed that 74% of employees feel more motivated in their work when they have the opportunity to make a positive impact on social or environmental issues. This is also reflected in outcomes: Deloitte found that companies with a clear approach to purpose and sustainability are, on average, 18% more productive and 12% more profitable.
Regulatory Compliance and Risk Mitigation
Every day seems to bring new rules and regulations focused on sustainability and positive impact, each requiring subtle changes in the way companies operate. From the UK’s recent laws on greenwashing to the UN calling on the advertising industry to become more sustainable, there’s no denying that countries and global organizations are increasingly holding companies accountable for their actions.
Being proactive in your ESG and sustainability efforts can help you stay ahead of these regulatory changes and mitigate the risks associated with them. Adopting sustainable practices and ensuring your actions are aligned with principles is a much smarter investment than risking fines, reputational damage, or a last-minute scramble to respond when new rules are introduced. Companies that take the lead on sustainability, ESG, and purpose are also in a better position to influence policies and industry standards, making these regulatory challenges easier to manage and plan for long-term.
Innovation and Competitive Advantage
Tackling sustainability means stepping out of your comfort zone. It may seem scary at first, but it’s also where the truly innovative thinking and agenda-setting work happens. Brands like Patagonia and IKEA that have embraced sustainability throughout their supply chains have also discovered more inspiring, creative and profitable ways of working as a result.
ESG drives innovation by encouraging companies to rethink their products, services and processes, and sustainable practices often lead to the development of new markets and revenue streams. Brands that embrace new ways of doing things are often seen as industry leaders, differentiating themselves from competitors and gaining a key competitive advantage over their peers.
Overall, the picture is clear and consistently supported by evidence: ESG, sustainability and positive impact initiatives, if done right, do not mean sacrificing profits, market share or investor confidence. In fact, quite the opposite. Get your approach to sustainability right, embrace it with confidence and communicate it clearly, and you will not only contribute to building a better world, but you will also put your business on a stronger, more profitable footing for the future.