Insights with Steve Ashkin | How to Be a Triple Outperformer

The concept of being a "Triple Outperformer," according to business research firm McKinsey & Company, is gaining traction. The firm believes it will become a pivotal strategy for companies aiming to achieve sustainable and profitable growth.  

Further, this evolution is happening in virtually all business sectors, including the Jansan industry.

McKinsey introduced the term in its August 2023 study, The Triple Play: Growth, Profit, and Sustainability. It refers to organizations that integrate environmental, social, and corporate governance (ESG) into their core business strategies.

According to the researchers, this approach yields significant advantages over competitors who may lag in ESG integration.

To conduct the study, McKinsey selected 2,269 publicly traded companies and grouped them into industry outperformers and underperformers based on their ESG scores, annualized growth, and economic profits.

The ESG scores were determined by applying a comprehensive evaluation of each company's environmental, social, and corporate governance practices. As to their findings, the McKinsey study underscores the importance of ESG and sustainability in business operations.

More specifically they report:

If all other business fundamentals are in place, it reveals that companies adhering to ESG principles have consistently outpaced their peers in terms of revenue growth and shareholder returns.

The findings are particularly compelling in the context of the global economic slowdown that began around 2008, exacerbated by the pandemic twelve years later. Both situations caused some of the world's largest companies to grow at a substantially diminished rate compared to the early 2000s.

However, in contrast, Triple Outperformers managed to increase their revenues at a median rate of 11 percent per year during these difficult years, which is 1.4 percentage points higher than other companies that did manage to perform well financially but did not prioritize ESG.

Furthermore, these Triple Outperformers also surpassed their peers in median excess total shareholder return (TSR) by 2.5 percentage points. This suggests that integrating ESG is not just a moral or ethical choice but a financially sound one as well.

These promising financial outcomes should reassure and instill confidence in business leaders in the Jansan industry, encouraging them to consider ESG integration.

However, working with organizations worldwide, I know that before adopting ESG strategies and sustainability, very often the C-suites first concern is, "How much will this cost?"

I tell them there may be added costs associated with this transformation; however, this study proves that if business leaders take a long-term perspective when it comes to sustainability and ESG, it will in time deliver increased revenues, profits, and shareholder returns.

The McKinsey report’s findings have profound implications for businesses across all sectors. They suggest that integrating ESG is no longer a niche strategy but a fundamental component of successful business operations. Companies that can effectively align their growth strategies with sustainability and social responsibility will likely see more robust performance and greater market rewards.

Considering these insights, I am encouraging our clients to reassess their growth strategies and ensure that ESG integration is in place because as we can see, it is a critical driver for long-term success.

-Steve

Steve Ashkin is president of the Ashkin Group, a consulting firm specializing in Green Cleaning and sustainability. Steve is recognized as one of the one hundred most important contributors to the professional cleaning industry in ISSA’s 100-year history.

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