McKinsey Research: How to win more revenue and profitability from ESG

We have found increasing demand from businesses for end-to-end advanced demand growth solutions that lift their odds of success. 

They seek to position and differentiate their product or business with less competition – with less pricing pressures – delivering new growth. 

At both strategic and operational levels, it is a form of co-share relationship at each step – combing our toolkit and people – research, combined with lifting and delivering more trust, credibility, authority, and a powerful value proposition (Pitch). 

Along with a strategic narrative that embeds into their social media, they are tested in real-time and adapted to land a proven differentiated offer with a precise buyer value. 

Recent work with a new market entrant found that most competitors think, act and communicate the same way – even across countries. 

Our research identified how to exploit new demand by offering significant value to a large part of the market. 

The message – differentiated businesses – stand out and stand up faster. 

A Top 10 McKinsey article summarised here explains how businesses can increase sales with differentiated ESG offers. 

A joint McKinsey and NielsenIQ study examined sales growth for products that claim to be environmentally and socially responsible: the US CPG sector research — which has millions of employees and trillions of dollars in annual sales found the following results. 

The questions are about products labelled

  • environmentally sustainable,
  • eco-friendly, 
  • Fairtrade,

Are these business practices achieving the goals of 

  • Reducing carbon emissions across value chains,
  • Offering employees fair wages and working practices, 
  • Supporting diversity and inclusion, 
  • Are customers responding to social and environmental claims with their wallets,

In a 2020 McKinsey US consumer sentiment survey, more than 60 percent of respondents said they’d pay extra for a product with sustainable packaging. 

  • A recent study by NielsenIQ found that 78 percent of US consumers say a sustainable lifestyle is essential to them. 
  • But many CPG executives report that their companies’ environmental, social, and governance (ESG) initiatives is the inability to generate sufficient consumer demand.

Mckinsey insights 

  1. Consumers are shifting their spending toward products with ESG-related claims.
  2. Products making ESG-related claims averaged 28 percent cumulative growth over the past five-year period versus 20 percent for products that made no such claims.
  3. Brands of different sizes making ESG-related claims achieved differentiated growth: Mckinsey reports. The data can’t explain the underperformance of medium-size brands, but they may need to gain large brands’ marketing and distribution scale to communicate better. 
  4. No one ESG-related product claim outperformed all others—but less-common claims tended to be associated with more significant effects.
  5. Combining claims may convey more authenticity. Products making multiple types of claims grew about twice as fast as those making only one.

 The result delivers healthier financial performance and a healthier planet – a real win-win.