Why a focus on ESG could be a competitive advantage in times of uncertainty
Debbie Morrison • March 15, 2023

ESG has become somewhat of a buzzword in recent years and for good reason –  Environmental, Social, and Governance (ESG) factors have gained significant importance in the FMCG and Food and Beverage Industries. But why is ESG vital to gaining a competitive advantage?

Sustainability is no longer an ideal, it is a mainstream concept and companies that prioritise this and other ESG factors are increasingly being perceived as more responsible, ethical, and sustainable. In the FMCG (Fast-Moving Consumer Goods) industry, a focus on ESG over traditional issues such as corporate strategy is emerging as both an ethical and commercial path to securing a competitive advantage in times of uncertainty.


Investors are increasingly assessing how companies behave as well as how they perform.

As investors and corporate boards assess the multitude of risks that could potentially impact their portfolios' returns such as; climate change, labour rights and political risk, how companies behave as well as how they perform is coming under increased scrutiny. Investors want to understand what a company's strategy is in these areas and whether it will provide them with an advantage over their peers or competitors. 

The result is a growing focus on ESG issues such as diversity and gender equality, employee health and safety, sustainability practices and climate risk management. This trend has been driven in part by regulatory changes such as ASIC’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Australia's insurance industry can expect an acceleration in climate risk reporting and sustainable finance obligations in 2023. In December, the federal government announced the start of a consultation process that would lead to mandatory climate-related disclosures.

But it's also happening because investors want to know that their money isn't funding unethical behaviour or activities with negative environmental consequences.


Investors want to understand how environmental and social risk is being managed.

ESG is about understanding how to manage environmental, social and governance risks. For board members and business leaders, it's about making sure that a company has good governance structures in place so that it can make decisions in the best interests of its stakeholders.

As we have seen in recent years, ESG factors are increasingly affecting company performance, but they also have the potential to significantly impact an organisation's reputation. In fact, investors are increasingly looking at ESG factors when making investment decisions--and this trend isn't likely to change anytime soon.


Corporate boards are increasingly being held accountable for ESG performance.

Economic pressures, talent shortages, digital transformation and shifting consumer expectations are all pressing issues for FMCG companies. Among the multitude of competing priorities, ESG issues don't seem like they would be at the top of the list.

However, research is finding that those who pay attention to ESG are actually finding themselves in a better position than those who don't. When it comes to ESG, McKinsey found that from 2,000 ESG studies on the impact of ESG on company returns, 68% of companies that prioritise environmental, social, and governance (ESG) concerns achieved positive returns. 

And when it comes to gender diversity on boards, another study by the University of California, Davis found that companies with higher female representation experienced lower costs and greater returns on capital during turbulent times.


How does ESG translate into a competitive advantage, especially in times of uncertainty?


Plagued with significant disruptions in recent years, including changing consumer preferences, increasing competition, and supply chain disruptions the FMCG industry has been hit hard.  These disruptions have highlighted the need for FMCG companies to adapt to changing circumstances and remain agile. 


One might argue that in light of such a challenging backdrop, rapid digital or business transformation may offer the greatest potential for organisations to secure a competitive advantage. Whilst the case for transformative or digital initiatives is indeed strong, factoring ESG into core business strategies can help organisations to better align products, services and business purpose with consumer and employee values, increasing their ability to meet stakeholder expectations. In doing so, FMCG companies can improve their ability to secure a competitive advantage by enabling them to respond to changing market conditions.



ESG can build greater resilience


As business leaders explore the ways in which they can mitigate risk, factoring ESG considerations into corporate strategy can help light the path to better decision-making. One of the key benefits of focusing on ESG is the ability to build resilience in the face of uncertainty. Through the lens of environmental sustainability and social responsibility, boards can better advise and support FMCG companies to build resilience by understanding how future risk can impact their organisation, thereby reducing their exposure to risks such as supply chain disruptions, regulatory changes, and reputational damage. 


Companies that prioritise sustainability by reducing their carbon footprint and implementing sustainable sourcing practices are less likely to face regulatory penalties and reputational damage. Similarly, companies that prioritise social responsibility by investing in their employees' well-being and safety are better equipped to deal with disruptions and the effects of unexpected events such as the COVID-19 pandemic, which highlighted the importance of employee safety and well-being. 


Research from Mercer shows that satisfied employees work harder, stay longer with employers, and seek to produce better results for the organisation. The same research found that companies with highly satisfied employees have, on average, 14% higher ESG scores than the global average.



ESG Improves stakeholder relationships


Secondly, ESG can be a powerful tool in helping FMCG companies build stronger relationships with customers and other stakeholders. A focus on ESG factors can help FMCG businesses to build stronger relationships with customers and other stakeholders. Customers are becoming increasingly concerned about the impact of their consumption on the environment and society. They prefer to buy products from brands that share their values and actively work towards sustainable and socially responsible practices. FMCG companies that prioritise ESG factors are seen as more ethical, sustainable, and trustworthy, which can help them build brand loyalty and customer trust.


This isn’t exclusive to customers, organisations that invest in ESG are more likely to attract and retain employees who share their values and are committed to creating positive social and environmental impact. 


Today's workforce is increasingly values-driven, and employees are more likely to work for companies that align with their values and offer a sense of purpose. By prioritising ESG factors, FMCG companies can attract and retain employees who are committed to creating positive social and environmental impact, and who are more likely to be engaged and motivated in their work. 


According to a survey conducted by SEEK in 2021, 79% of Australian workers want to work for a company that is committed to making a positive impact on the environment and society. The same survey found that 74% of respondents are more likely to apply for a job at a company that is environmentally and socially responsible, and 81% said they would consider leaving a company that didn't have a good reputation for corporate social responsibility.



ESG drives innovation and opportunity

Thirdly, a focus on ESG factors can lead to innovation and new business opportunities for FMCG businesses. FMCG companies that prioritise ESG factors are more likely to identify and capitalise on emerging market trends related to sustainability and social responsibility.

By prioritising sustainability, FMCG businesses are better positioned to develop products that are made from renewable materials or that are recyclable, enabling them to tap into emerging markets that promote health and wellness or address social issues such as poverty and inequality. 


Additionally, ESG factors are more likely to attract investment from impact investors, who are looking for companies that generate positive social and environmental impact in addition to financial returns. 


While some FMCG companies may be reluctant to prioritise ESG factors because of concerns they will harm profitability and competitiveness, research shows that companies that prioritise ESG outperform their peers in terms of financial performance and market valuation. A study by Harvard Business Review found that companies that prioritise sustainability outperformed their peers in terms of stock performance and financial performance. In addition, socially responsible investors are more likely to invest in companies that generate positive social and environmental impact.



Moreover, a focus on ESG factors can help FMCG companies to differentiate themselves from their competitors in a crowded market. In the FMCG industry, where competition is fierce, companies that prioritise ESG factors can stand out by offering products and services that are more sustainable, ethical, and socially responsible. This can help to build brand loyalty and customer trust, which can lead to increased sales and profitability.


In fact, ESG factors can be integrated into corporate strategy to create long-term value for the company and its stakeholders. Companies that prioritise ESG factors can use them as a lens to evaluate and inform corporate strategy, identify new business opportunities, and manage risk. 


Business leaders and executives can use sustainability metrics to evaluate the environmental impact of their operations, identify areas for improvement, and implement sustainable practices that reduce costs and increase efficiency. Similarly, companies can use social metrics to evaluate the impact of their operations on employees, customers, and communities, identify areas for improvement, and implement policies and practices that promote social responsibility.



In conclusion, a focus on ESG factors over traditional issues such as corporate strategy could be a competitive advantage for FMCG businesses in times of uncertainty. By prioritising ESG factors, FMCG companies can build resilience, strengthen stakeholder relationships, drive innovation, and differentiate themselves from their competitors. 


Moreover, a focus on ESG factors can lead to improved financial performance, market valuation, and talent attraction and retention. As the business world continues to evolve, FMCG companies that prioritise ESG factors are likely to be better equipped to adapt to changing circumstances and emerge as leaders in their industry.


At ELR Executive we have over 20 years of experience helping FMCG and Food and Beverage organisations identify and attract the right talent to help achieve better business outcomes. If you'd like to learn more about how we can help you hire the right leadership talent, who can help your organisation turn ESG into a competitive advantage, speak to us today.

Your Culture Report Won’t Show You This

By John Elliott • June 6, 2025
On paper, they were fully resourced. No complaints logged. No formal red flags. Delivery metrics holding steady. But behind closed doors, the signs were there. Delays. Fatigue. Silence in meetings where pushback used to live. And a growing sense that key people were leaning out, emotionally, if not yet physically. When the cracks finally showed, the conclusion was predictable: “We need more people.” But that wasn’t the real problem. The problem was trust. And most organisations never see it until it’s too late. The Hidden Cost of Disengagement In Gallup’s 2023 global workplace report , only 23% of employees worldwide reported being actively engaged at work. A staggering 59% identified as “quiet quitting”, psychologically detached, going through the motions, doing only what their job description demands. Source: Gallup Global Workplace Report 2023 Disengagement is expensive. But it’s also quiet. It doesn’t show up on a balance sheet. It doesn’t send a Slack message. Disengagement isn’t new, just silenced. And in executive teams, it looks different. It looks like polite agreement in strategy meetings. It looks like leaders shielding their teams from unrealistic demands, instead of confronting the system causing them. It looks like performance metrics still being met… while people emotionally check out. The issue isn’t always capability. It’s safety. Psychological, political, and professional. Many senior leaders don’t raise concerns, not because the problem isn’t real, but because they don’t believe they’ll be heard, supported, or protected if they do. And this is where the failure begins. The Leadership Lie No One Talks About We talk a lot about leadership capability. About experience, commercial acumen, execution strength. But we don’t talk enough about context. Every leadership hire walks into a culture they didn’t create. They inherit unwritten rules, quiet alliances, and legacy power structures. If those dynamics are broken, or if trust is fractured at the top, no amount of capability will compensate. According to a 2022 Deloitte mid-market survey, 64% of executives said culture was their top strategic priority. But only 27% said they actually measured it in a meaningful way. We say culture matters. But we rarely structure around it. And so new leaders walk in with pressure to perform, but little real insight into what the role will cost them emotionally, politically, or personally. We Don’t Hire for Trust. And It Shows. In executive search, the conversation is often dominated by pedigree and “fit.” But fit is often a euphemism for sameness. And sameness doesn't build trust, it maintains comfort. We rarely ask: Does this leader know how to build trust vertically and horizontally? Can they operate in a low-trust environment without becoming complicit? Will they challenge inherited silence, or unconsciously uphold it? Instead, we hire for confidence and clarity, traits that often mask what’s broken, rather than reveal it. And when those hires fail? We call it a mismatch. Or we cite the usual: “lack of alignment,” “wasn’t the right time,” “they didn’t land well with the team.” But the truth is often uglier: They were never set up to succeed. And no one told them until it was too late. The Cultural Infrastructure Is Missing One of the most damaging myths in leadership hiring is that great leaders will “make it work.” That if they’re tough enough, experienced enough, skilled enough, they’ll overcome any organisational dysfunction. But high-performance isn’t just personal. It’s systemic. It requires psychological safety. A clear mandate. The backing to make hard decisions. The freedom to speak the truth before it becomes a PR problem. When that infrastructure isn’t there, when the real power dynamics are unspoken, good leaders stop speaking too. And the silence spreads. What Trust Breakdown Really Looks Like Often, the signs of a trust breakdown don’t show up in dramatic ways. They surface subtly in patterns of underperformance that are easy to misread or excuse. You start to notice project delays, but no one flags the root cause. Teams keep things moving, quietly compensating for the bottlenecks rather than surfacing them. Not because they’re careless, but because they’ve learned that early honesty doesn’t always earn support. New leaders hesitate to make bold calls. Not because they lack conviction, but because the last time they did, they were left exposed. Board reports look flawless. Metrics track nicely. But spend five minutes on the floor, and the energy tells a different story. These are not resource issues. They’re relationship issues. And the data backs it. According to Gallup’s 2023 State of the Global Workplace report , just 23% of employees worldwide are actively engaged. Worse, around 60% are “quiet quitting.” That’s not just disengagement. It’s people doing only what’s safe, only what’s required, because trust has quietly eroded. Gallup also found that managers account for 70% of the variance in team engagement, a staggering figure that reinforces just how pivotal leadership trust is. When people don’t feel psychologically safe, they shut down. Not dramatically. Quietly. Invisibly. What’s breaking isn’t the org chart. It’s the ability to speak plainly and be heard. And by the time it’s visible? The damage is already done, and someone calls for a restructure. “Low engagement is estimated to cost the global economy $8.8 trillion, 9% of global GDP.” Gallup, State of the Global Workplace 2023 So What’s the Real Takeaway? If you’re seeing performance issues, before you jump to headcount, ask a different question: Do the leaders in this business feel safe enough to tell the truth? Because if they don’t, the data you’re reading isn’t real. And if they do, but you’re not acting on it, then they’ll stop telling you. Leadership doesn’t fail in obvious ways anymore. It fails in the gap between what people know and what they’re allowed to say. And the price of that silence? Missed opportunity. Reputational damage. Cultural decay. Sometimes, the problem isn’t who you hired. It’s what you’ve made it unsafe to say.

The Energy’s Gone, But Everything Still Looks Fine

By John Elliott • May 27, 2025
Why Culture Decay in FMCG Is a Silent Threat to Performance It doesn’t start with resignations. It starts with something much quieter. A head of operations stops raising small problems in weekly meetings. A sales lead no longer defends a risky new SKU. A team member who used to push ideas now just delivers what they’re asked. Nothing breaks. Nothing explodes. It just... slows. And from the outside, everything still looks fine. The illusion of stability In food and beverage manufacturing, where teams run lean and pressure is constant, performance often becomes the proxy for culture. If products are shipping, if margins are intact, if reviews are clean, the assumption is: we're good. But that assumption is dangerous. According to Gallup's 2023 global workplace report, only 23% of employees worldwide are actively engaged, while a staggering 59% are "quiet quitting ", doing just enough to get by, with no emotional investment. And in Australia? Engagement has declined three years in a row. In a mid-market FMCG business, those numbers rarely show up on dashboards. But they show up in other ways: New ideas stall at the concept phase Team members stop challenging assumptions Execution becomes rigid instead of agile Everyone is "aligned" but no one is energised And by the time the board sees a drop in revenue, the belief that once drove the business is already gone. The emotional cost of cultural silence One thing we don’t talk about enough is what this does to leadership. When energy drains, leaders often become isolated. Not because they want to be, but because the organisation has lost the instinct to challenge, question, or stretch. I’ve seen CEOs second-guessing themselves in rooms full of agreement. Seen GMs miss red flags because nobody wanted to be "the problem". Seen founders mistake quiet delivery for deep buy-in. The emotional toll of unspoken disengagement is real. You’re surrounded by people doing their jobs. But no one’s really in it with you. And eventually, leaders stop stretching too. We train people to disengage without realising it Here’s the contradiction that most organisations won’t admit: We say we want initiative, but we reward obedience. The safest people get promoted The optimists get extra work The truth-tellers get labelled difficult So people learn to conserve energy. They learn not to challenge ideas that won’t land. They learn not to flag risks that won’t be heard. And over time, they stop showing up with their full selves. This isn't resistance. It's protection. And it becomes the default when innovation is punished, risk isn't buffered, and "alignment" becomes code for silence. Boards rarely see it in time Boards don’t ask about belief. They ask about performance. But belief is what drives performance. When culture begins to fade, it doesn't look like chaos. It looks like calm. It looks like compliance. But underneath, the organisation is hollowing out. By the time a board notices the energy is gone, it’s often because the financials have turned, and by then, the people who could've helped reverse the trend have already left. In a 2022 Deloitte study on mid-market leadership, 64% of executives said culture was their top priority, yet only 27% said they measured it with any rigour . If you don’t track it, you won’t protect it. And if you don’t protect it, don’t be surprised when it disappears. The real risk: you might not get it back Here’s what no one likes to admit: Not all cultures recover. You can try rebrands. You can run engagement campaigns. You can roll out leadership frameworks and off-sites and feedback platforms. But if belief has been neglected for too long, the quiet ones you depended on, the culture carriers, the stretchers, the informal leaders, they’re already checked out. Some have left. Some are still there physically but not emotionally. And some have started coaching others to play it safe. Once that happens, you're not rebuilding. You're replacing. So what do you do? Don’t listen for noise. Listen for absence. Absence of challenge. Absence of stretch. Absence of belief. Ask yourself: When was the last time someone in the business pushed back? Not rudely, but bravely? When did someone offer an idea that made others uncomfortable? When did a leader admit they were unsure and ask for help? Those are your indicators. Because healthy culture isn’t silent. It’s alive. It vibrates with tension, disagreement, contribution and care. If everything looks fine, but no one’s really leaning in? That’s your problem. And by the time it shows up in the numbers,t might already be too late.