ESG is a proven ‘moneymaker,’ says Infosys report

Nearly all, or 90%, of executives agree that having ESG (Environmental, Social, and Governance) initiatives correlates with higher profits.

A report from the Infosys Knowledge Institute, the thought leadership and research arm of Infosys, found that profit grows by one percentage point for every 10 percentage point increase in ESG spending.

This means a company that currently spends five per cent of its budget on ESG can expect a one percentage point profit increase if it aligns the operating or capital budget to increase the ESG spending portion to 15%.

The report also stated that most companies more often prioritize the environmental segment than social or governance. However, Infosys stated that putting more emphasis on some S and G initiatives is correlated with better profits.

Despite these positive outcomes, Infosys said that most companies tend to focus more on brand benefits than on other financial outcomes.

Infosys Chief Financial Officer Nilanjan Roy said, “Going forward, sustainability is the way to do business. Organizations have to reorient their business models so that ESG is completely integrated within. That is the only way to maximize stakeholder returns.”