How companies are calculating financial benefits of intangible ESG programs

ESG Insider: A podcast from S&P Global

As more companies look to adopt ESG-friendly strategies, they sometimes run up against the challenge of finding the financial justification for doing so. Furthermore, opponents of ESG initiatives often question whether such efforts cost companies more money than it brings them.

This is the heart of the debate over ESG – are companies sacrificing financial returns as they move to become more socially and environmentally responsible?

A number of studies have found that companies with strong ESG practices tend to perform better. But it can be difficult to measure the financial impact of less tangible factors. For example, what’s the payoff of cutting your company’s emissions? What is the financial impact of expanding your paid sick leave?

In this episode, we'll explore a methodology developed by the Center for Sustainable Business at the New York University’s Stern School of Business that helps companies put a price on things like employee retention, avoided costs, and improved insurance rates. The methodology is called the Return on Sustainable Investment, or ROSI.

From the center's director Tensie Whelan, we'll hear how the methodology has helped companies understand the financial benefits of their ESG programs.

And we'll talk with Kate Chisholm, the Chief Sustainability Officer at Capital Power, a publicly-traded independent power producer in Canada, that used the ROSI tool to assess its decarbonization strategy and decided to retire its coal-fired power plant fleet in 2023 as a result.

ROSI "helps you put numbers where intuition was the best thing you could do before," Kate said.

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