October 27, 2021
Many consumers and investors consider ethical practices, sustainability and other factors before purchasing a company’s products or shares of its stock. A greater focus on the environment, social issues and corporate transparency have helped fuel the environmental, social, and governance (ESG) movement. As a result, corporations in virtually every sector are looking for ways to show efforts to minimize their carbon footprints, support diverse communities, green energy and the like.
That demand by consumers and investors alike has given to a massive rise in ESG investing. Bloomberg Intelligence estimates that ESG assets may hit $53 trillion by 2025, representing more than a third of the $140.5 trillion in projected total assets under management. While investment portfolios continue to move away from those areas not considered ESG-friendly, more corporations – even those tied to fossil fuels – are looking for ways to reclassify their stock as an ESG play.
Earlier this week, Investor’s Business Daily (IBD), a leading financial news and research organization, recently unveiled its third annual Best ESG Companies list. The list of 100 corporations, which mixes profitability with ethical and social responsibility, was screened from a universe of more than 6,000 companies. Here is a look at a few consumer-facing companies that made the list and their ESG efforts.
NIKE, Inc. (Tii:NKE)
The world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories, is looking to diversify its workforce further. To that end, the company announced a goal to hit 50% female representation in the global corporate workforce and 45% representation in leadership positions by 2025. NIKE has also increased the representation of racial and ethnic minorities in the U.S. to more than 29% of its VP leadership team – an 8% increase in the last two years – and aims to reach 35% by 2025. The apparel giant also works with suppliers to reduce its environmental impact across carbon, waste, water and chemistry. NIKE also reported that it is currently using 100% renewable energy in the United States and Canada in its owned or operated facilities. Its textile dyeing and finishing suppliers reduced freshwater use by 30%, and Tier 1 finished goods footwear suppliers diverted 99.9% of NIKE’s manufacturing waste from landfills.
Vista Outdoor Inc. (Tii:VSTO)
Vista Outdoor established Vista 2030, an initiative that encompasses a set of goals and principles around environmental sustainability, diversity and inclusion, supply chain management, product safety, governance and other topics. The leading global designer, manufacturer and marketer of consumer products in the outdoor sports and recreation markets also outlined its Fiscal Year 2022 Priorities. These efforts include improving diversity within the Vista Outdoor organization, board, and management team and leveraging marketing and product development efforts to invite new and more diverse users to try outdoor experiences. The priorities also include expanding efforts to reduce the impact of its business operations on the environment through recycling, reductions in packaging waste, and efficient energy usage.
Five Below Inc. (Tii:FIVE)
With more than 1,100 stores in 40 states, Five Below is a leading retailer targeting the tween and teen markets. The company’s textiles are produced from recyclable and recycled materials and various Fair Trade-certified products. In 2021, the retailer expects to sell some 4 million low-cost reusable bags in its stores. Five Below has also reduced the amount of cardboard it uses by approximately 5,500 tons for 90,000 trees saved. As a result, Five Below shipped over 400 fewer containers, reducing energy consumption. Since 2006, Five Below has also raised over $25 million for charities dedicated to kids and their families. Earlier this week, the company announced that it raised nearly $1.5 million through its fundraising campaign for St. Jude Children’s Research Hospital
Yum! Brands (Tii:YUM)
Through its KFC, Pizza Hut and Taco Bell brands, Yum! Brands operates more than 51,000 restaurants in more than 150 countries and territories. The holding company supports several ESG programs, including the Unlocking Opportunity Initiative. The initiative is a $100 million global commitment to support front-line restaurant teams and community members through equity, inclusion, education, and entrepreneurship. At least $6 million of this total will be used to advance opportunities in Louisville, Kentucky, the hometown of Yum! and KFC. Yum! Brands also joined the OneTen coalition, uniting with other U.S. businesses in advancing equity and career opportunity for underrepresented people of color. On the environmental side, the company pledged to reduce greenhouse gases by 50% by 2030 and become carbon neutral by 2050 and is expanding its investments in plant-based and vegetarian options through a new strategic partnership with Beyond Meat, Inc. (Tii:BYND).
Whether the environmental and socially conscious investing trend continues at its current pace remains to be seen. But for the foreseeable future, consumer and investor demand makes it likely corporations of all types will continue to adhere to guidelines to ensure they remain ESG-friendly.