More regulatory guidance would spur corporate ESG efforts, survey reveals
While most companies are considering environmental, social and governance (ESG) factors when updating their strategies, half report feeling deterred from investing more into delivering ambitions, largely due to poor guidance.
That is a headline finding of a survey conducted by consultancy Alcumus, which polled 621 senior managers, each at a different business, on their firm’s approaches to ESG. Professionals from the UK, US and Canada were interviewed.
Promisingly, 90% of the respondents said their business had included ESG considerations in its overarching strategies. And, among those who said their business hadn’t made this inclusion yet, 43% said there are plans to do so by 2025.
Overall, two-thirds of the respondents said changing ESG-related demands from the top-down (regulation, investors) and bottom-up (consumers, staff) is having a “large” or “very large” impact on their business.
The perception of ESG-related risks and opportunities was found to be more pronounced at large businesses than their smaller counterparts.
Nonetheless, the survey also found that half of respondents feel deterred from investing more into schemes that would improve ESG outcomes. The most commonly cited deterrents were a lack of technical understanding of related issues and ways to track impacts and outcomes, and a lack of guidance from regulators.
It is noteworthy that both of these challenges have led to accusations that some firms are using ESG terminology as greenwashing or purpose-washing in recent months. The fact that there are a huge array of ESG-related standards, metrics and rankings makes performance difficult to compare, for example. Moreover, a narrow focus on too few parts of the ESG agenda could cause negative impacts elsewhere. 47% of those surveyed by Alcumus said their business is not acting on all three aspects of ESG at a strategy level.
Promisingly, two-thirds of the professionals surveyed said their business is investing in technology and processes to improve the collection of ESG-related data. The businesses surveyed reported that their biggest data gaps include accessing information from the supply chain and from employees working remotely.
Indeed, the report from Alcumus comes shortly after CDP revealed that the number of requests for climate-related information made from end-user businesses to suppliers was up 71% in 2021, on 2020 levels.
“These are still tough times, but companies are not just in survival mode – there is a clear focus on ‘building back better’ post-pandemic,” said Alcumus’ senior vice president of sustainability David Picton.
“Many are using the situation as a catalyst to revisit the viability of their business models and make changes to thrive in the future. Addressing ESG plays a key part in this, but to demonstrate long-term impact and change, it is critical to have data and evidence.”
ESG in the spotlight
Last week, EY published the results of its Long-Term Value and Corporate Governance Survey, which polled 200 directors and senior managers at large businesses on ESG-related topics.
More than four in five of those surveyed (84%) say that their stakeholders are increasingly expecting their firms to be a force for good in terms of environmental and social sustainability. This was a considerable increase in proportion from last year’s survey (66%), adding to a growing body of evidence that Covid-19 has increased awareness of ESG-related issues.
However, the survey also revealed that 43% of directors and managers believe there is a lack of commitment from the board to fully integrate ESG factors – up from 28% in last year’s iteration of the survey.
EY said these findings point to an era of “being at a crossroads in the ESG agenda”.
© Faversham House Ltd 2023 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.