ESG spending leads to higher profits, Infosys report finds

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A new report from Infosys, the ESG Radar 2022, has found that companies that prioritize sustainability, and invest in ESG spend in their business practices, tend to see an increase in profits. The report, which was produced by the Infosys Knowledge Institute and surveyed 2,500 business executives across a variety of industries and regions including the US, UK, and China, found that a 10% increase in environmental, social, and governance (ESG) spending would lead to a 1% increase in profits. In addition to the financial benefits, the report also found that a robust ESG framework and leadership strategy can help to build long-term business resilience and increase revenue growth and profitability by an additional 2%.

However, the report also highlighted the need for improvement in many companies’ ESG practices. Only 27% of those surveyed said their company has all three components of a robust ESG framework in place, and just 19% said their company ties executive compensation to ESG goals. The C-suite and top executive ranks were found to be the most neglected areas for ESG changes, with just 30% of respondents saying their firms place responsibility for ESG with the C-suite.

Krish Shankar, EVP and group HR head at Infosys, emphasized the importance of sustainability in attracting and retaining top talent. He noted that “employees are starting to look at ESG as one of the elements of the value proposition of a company.” The report found that almost all companies are interested in aligning their ESG goals with their supply chain, but less than one-third share ESG expectations or requirements with suppliers. In terms of the changes companies are making to meet their ESG goals, the report found that the top four were all related to products and services, including extending the lifespan of products or increasing their circularity, introducing new products with a greater positive ESG impact, changing product sourcing to reduce societal impact, and phasing out products or services with a negative ESG impact.

Overall, the findings of the Infosys ESG Radar 2022 report suggest that sustainability is becoming an increasingly important part of companies’ business strategies, and that prioritizing ESG initiatives can lead to improved financial performance and long-term viability. As more investors and consumers prioritize sustainability in their decision-making, it is likely that we will see even more companies incorporating ESG practices into their operations.