Businesses talk big on ESG issues but aren’t investing accordingly, survey reveals
Nine in ten business decision-makers in Europe, the Middle East and Africa now class improving Environmental, Social and Governance (ESG) performance as their top priority, a new survey has found. Yet, in most cases, their organisations are failing to match this talk with investment.
The ‘global sustainability survey’, conducted by Google Cloud, polled 1,500 professionals with C-suite level seniority about their approach to the fast-evolving ESG agenda. Participants came from 16 countries across the EMEA region and represented businesses in a range of sectors, including healthcare, manufacturing, technology, media, financial services and telecommunications.
Promisingly, 90% of the respondents said they see ESG as their organisation’s top priority, with most claiming that they are willing to evolve or adjust business models to improve their social and environmental impacts.
Moreover, almost three-quarters (72%) of the respondents are attending at least four sustainability-related meetings every quarter, and almost two-thirds (63%) state that they are willing to risk lower revenue in the short term to ensure sustainable development in the long term.
But the research revealed that a lack of investment is the most prevalent barrier to improving ESG-related ambitions, actions and outcomes. On average, the businesses surveyed allocated just 9% of their annual budgets to ESG efforts. 40% of businesses polled said there are no plans to increase related investments in 2022.
Other common challenges included a lack of education and understanding at the board level and a culture focused on short-term growth and profits, as well as developing and implementing effective measurement tools.
To this latter point, while 96% of those surveyed represent an organisation with at least one environmental programme in place, only one-third have a framework in place to measure progress against programme targets. This is of particular concern amid growing demands for strong sustainability data from a range of stakeholders, from customers to investors.
In some of the geographies covered by the survey, legal changes are bringing new sustainability disclosure requirements for corporates, to help them meet these demands. Here in the UK, for example, 1,300 firms are now required to report climate risk in line with the Taskforce on Climate-Related Disclosures’ (TCFD) framework, per changes implemented on 6 April.
Many of the businesses polled by Google Cloud stated that technology will be key to helping them measure and report on the impact of their ESG efforts.
In related news, a survey of 1,000 UK-based business decision-makers, commissioned by printing and media business Seacourt, has charted the trends within the corporate net-zero movement.
That survey revealed that just one-third of businesses have made plans for achieving net-zero by or before 2050 and have taken the first steps to implement these plans. A further third have either finalised plans to reach net-zero but are yet to begin the implementation process, or are currently finalising net-zero plans.
Several of the questions put to the respondents focused on Scope 3 (indirect) emissions. CDP estimates that the average large business will generate 11.4 times more emissions in its supply chains than its operations, making supplier engagement a key part of any credible net-zero strategy.
The findings revealed poor progress to date. Two-thirds of the businesses represented are yet to measure the environmental impact of their supply chains. 45% said they do not have a sustainable purchasing strategy and 26% could not provide any evidence of actively seeking suppliers with third-party certifications on ethics or the environment.
Seven in ten of those polled said the government should introduce additional incentives for business decarbonisation, and/or penalties for businesses operating in an unsustainable way.
“We need Government to provide incentives and penalties to make sure all UK businesses are on the journey,” said Seacourt’s managing director Gareth Dinnage. “With only eight years to go before our first national target, we do not have time to leave businesses behind in this process.”
Download edie’s new Sustainable Business Leadership report
edie’s latest must-read report is now available to download, charting the trends and challenges that will shape and define corporate leadership across the ESG spectrum over the coming months.
The 2022 Sustainable Business Leadership report is hosted in association with Centrica Business Solutions. It reveals and analyses the key findings from edie’s exclusive survey of more than 250 sustainability professionals as well as summarising some of the key themes and discussions that took place over the two-day Sustainability Leaders Forum in March 2022.