Kevin O’Leary on ESG: Straight Talk from Mr. Wonderful
ESG isn’t some marketing ploy for global companies, says respected investor, author, and venture capitalist Kevin O’Leary of ABC’s Shark Tank. Caring about environmental, social, and governance (ESG) topics is imperative at both the government policy and corporate levels.
“Consumers care. The government cares. People care. Mandates, policies all around the world are toward sustainability,” he said. “ESG is not a marketing scam anymore.”
Kevin recently joined Mandi McReynolds, Senior Director of ESG at Workiva, to chat about the rising importance of ESG reporting and its future impact on businesses and individual investors.
Keep reading for four highlights from our conversation with Shark Tank’s Mr. Wonderful:
1. Mission and sustainability in the business model
ESG reporting is the core to any successful business today, Kevin said. To get funded and grow a business, leaders must successfully integrate social missions and ESG compliance mandates into their business models.
Times have changed, and so have consumers, he said. To achieve business success, he suggests showing people you care about the world through ESG reporting.
“If you don't show people that you care about sustainability, you care about ESG, you care about the environment—if you don't care, they don't care about you,” he stated. “Every business needs to know that. You can see it. [There are] massive movements toward specifically solving for sustainability.”
2. Why ESG really matters
Kevin credits receiving his MBA in environmental studies and his stepdad’s involvement in the United Nations for introducing him to why ESG matters and shaping his investment practices today.
“ESG really matters because it’s not just corporately driven. It’s consumers making that decision—buying one product over another, understanding what the company's policy is, what their mission is, how they're giving back. And how (companies are) being sustainable makes the companies more profitable,” he said. “So ESG compliance is a big deal.”
Consumers want sustainability, and Kevin said he will not invest in companies that are unwilling to conduct a carbon audit.
“Many companies approach me all the time, and they know that's how I think, and I'm not the only one,” he said. “There are millions of us investors that want to see this fixed. There is no greed like the greed of pollution.”
3. Investing in ESG
Kevin argues that investing in ESG-driven businesses is a direction many young investors are moving toward in a big way. Many young investors want their investments to align with their values.
“This is a rolling momentum,” he stated. “When you invest that way, you are pushing the institutions in that direction. I think it's fantastic that young people are starting there.”
He even suggested we should consider saving 10 to 20 percent of our salaries and putting it into investments with ESG mandates that are broad based.
4. The benefits of being socially responsible
Mandi noted that BlackRock CEO Larry Fink predicted that innovators with sustainable, scalable solutions would be among the next 1,000 “unicorns,” or private companies valued at over $1 billion.
“People assume that if you have a social mandate, a social mission, a sustainability mission, ESG mandates you’re abiding by, that somehow that does not equate to profits,” Kevin reflected. “Nothing is farther from the truth. Companies that take on these very complex societal issues and particularly make it clear to the customers that are buying their goods and services that this is part of their DNA, part of their business model, are richly rewarded with very, very strong profits because people get on board, become very loyal to the brands and the goods and services that are part of these mandates.”
He argues that the next generation of companies that will be more successful will be the ones who are socially responsible and invest in themselves by jumping aboard strong ESG practices.
“It's not that hard,” he states, “And really, if you lead by example, other people will follow you because it just makes good sense.”
Looking for guidance to take your organizations’ ESG reporting game to the next level? Check out Workiva’s ESG resource hub.