ESG has become such a large component of my law practice that I am now collaborating with a fabulous group attorneys in ESG Legal Solutions, LLC, a new non-law consulting firm. Nancy Hudes and I are now publishing a new blog at www.ESGLegalSolutions.com (.. yes, this blog will continue). This post originally appeared in that blog. If we can assist you or someone you work with in ESG strategy and solutions, from policy to project implementation, do not hesitate to reach out to me.
Brand name and reputation is the number one reason businesses engage in ESG efforts.
With 78% of respondents in a survey published last Wednesday responding that brand name and reputation topped the list of matters affected by ESG, that 78% response was single highest number in any response to a question in the survey. Of course, even that overwhelming response does not stand alone and is symbiotic with the other top reasons businesses engage in ESG efforts. Customer satisfaction polled at 54%, employee satisfaction polled at 49%, and investor satisfaction polled at 48%; all areas of ESG impact and arguably contributing to brand name and reputation.
The survey conducted by OCEG, a global think tank empowering business to act with integrity, looked at how more than 500 organizations across the globe are addressing Environmental, Social Governance (ESG). Survey respondents, more than half of whom are board members or c-suite executives, reported ..
Stakeholder demand for ESG consideration is quickly expanding and survey participants indicate that they are responding in kind.
Somewhat disconcerting is that fewer than 10% of respondents indicate they are highly confident in the efficacy of their company ESG capabilities, with nearly 28% not at all confident in their efforts. That lack of confidence may reflect that there are, as of yet, no widely accepted ESG metrics.
Approximately 50% of respondents indicate that their businesses publish their ESG results, but only 12% do so as part of an integrated ESG report. A larger number (30%) do so within a sustainability report and the rest use some other format. Notably, most sustainability reports do not address the social and governance aspects of ESG and most only consider environmental aspects. This indicates an area in need of maturation, both in terms of metrics collected and form of reporting. Having clear and complete ESG metrics is important as more and more investors and other stakeholders are considering them in making decisions and to mitigate risk from that reporting.
Interestingly, more respondents indicate that their own businesses use that ESG data when making decisions, including when evaluating vendors and suppliers. More than 50% also indicate that ESG is considered in executive team compensation or such is in the planning stage. Consideration for ESG related employee compensation is also underway.
Now more than ever, a considered approach to ESG is essential for organizations of all sizes. ESG remains at the top of the agenda for an array of interested parties, from shareholders and suppliers to regulators, customers and employees.
As a result of the ongoing global pandemic, continued social justice issues, geopolitical risk, increasing regulatory scrutiny and more, the spotlight on ESG remains bright, and will continue to get brighter. The findings in this survey crystallize the thinking by many large businesses around many of these issues and highlights where progress has been made, and where there is still work to be done.
Access the complete survey here.
Note, we are days away from putting our own survey about ESG penetration into the marketplace in the field. If you receive an email requesting you respond to our survey, please do so.
The OCEG survey concludes, “as ESG moves away from a box checking exercise towards legal requirement, organizations need to be certain they have the structures and processes in place to allow them not only to comply, but to thrive.”