Has sustainability dropped down the agenda for CEOs?

New research has revealed that geopolitical concerns and political uncertainty have dethroned environmental, social, and governance (ESG) issues on the top of the risk radar for chief executives worldwide, but does this mean that corporates are paying less attention to sustainability?

Has sustainability dropped down the agenda for CEOs?

This is based on KPMG’s 2023 CEO Outlook report which surveyed more than 1,300 senior executives from various corporate giants.

According to the survey, a considerable 69% of chief executives have embedded ESG into their business as a means of value creation, underscoring the recognition that delivering against ESG issues remains integral to their long-term corporate strategies.

Nonetheless, more than two-thirds of executives (68%) remain worried that their progress on ESG isn’t strong enough to stand up to stakeholder scrutiny.

KPMG’s global ESG head John McCalla-Leacy said: “Despite increasing economic and political uncertainty, the latest survey findings reflect a growing sense of resilience and focus from CEOs on ESG.

“Topics like the climate crisis have become polarised in some regions, but business leaders have told us they’re prepared to take tough, ethical decisions and stances to ensure that they play a positive role in driving the transition to more sustainable operations, which benefits everyone.

“With continued financial and geopolitical pressures ahead, it will undoubtedly be a test of nerves for many CEOs, but the data shows that the vast majority of senior executives are now fully onboard and recognize that E, S, and G are no longer optional extras for successful, sustainable businesses.”

Around 35% of executives have adapted their language when referring to ESG, signalling a trend toward greater specificity and a focus on prioritising efforts where they can have the most impact.

The survey respondents believe that their investments in ESG will have the most significant impact over the next three years on customer relationships, brand reputation, and merger and acquisition (M&A) strategies.

Additionally, the survey highlights that 64% of chief executive officers believe that as trust in some institutions declines, the public expects businesses to step in and fill the void of societal changes, adding weight to the importance of ESG initiatives for businesses in maintaining public trust and demonstrating corporate responsibility.

KPMG International’s global chief executive officer Bill Thomas said: “Business leaders are facing challenges and obstacles to growth on multiple fronts – from geopolitical uncertainty and politicisation to increased stakeholder expectations in the ESG space.

“What I find reassuring is that, despite the many macroeconomic and geopolitical challenges right now, mid-term global confidence remains relatively robust. There’s a consensus that we can, in time, return to a path of international, sustainable long-term growth.”

Nonetheless, a recent RepRisk report revealed that there has been an increase in instances of greenwashing that pose corporate risks. One out of every four ESG issues related to climate is now linked to greenwashing, up from one in five the previous year.

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