38% of companies lack an Environmental, Social and Governance strategy, finds survey

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13th September 2024 12:08 - Central Government

38% of companies lack an ESG strategy: A recent survey has revealed that more than half of B2B respondents believe that “for most companies, ESG is just a marketing exercise”

The survey, conducted by GlobalData, involved 360 respondents and focused on the implementation of ESG strategies in companies, as well as the underlying reasons for implementing ESG.

Nearly a third of respondents (32%) felt that while some ESG strategies were purposeful, others were just a marketing exercise. The survey also revealed that 38% of respondents identified legislation and government pressure as key drivers behind its adoption - 32% cited a desire by companies to improve their financial performance. Significantly, only 8% of survey respondents believe that most businesses are committed to ESG. And despite government legislation and stricter guidelines from regulators to tackle "greenwashing", the report found that employees do not have much faith in corporate ESG.

The CBI has previously stated that over 60% of investors will consider a company’s ESG credentials before investing. If ESG has the potential to drive business growth while also benefiting the environment and supporting communities, why aren’t all companies embracing it in the same way?

Last June, the UK Advertising Standards Authority (ASA) published stricter guidelines for companies promoting their sustainability credentials. In October 2023, the CMA published new guidance on how businesses can meet their environmental sustainability goals without breaking the law. Additionally, the move to make ESG standards mandatory rather than voluntary will add another layer of scrutiny to a company’s sustainability claims, so it’s worth considering whether legislation and regulation are making the implementation of ESG more complicated and harder for some companies to achieve. Or, do some companies genuinely still consider ESG a PR move.

GlobalData’s recent ESG 2.0 report noted that: “Companies now have to be careful about their communications and strategy on ESG. Regulators are increasingly keen to scrutinize them, politicians might single them out, and stakeholders are demanding action to meet ESG commitments.”

Whatever the reasons for non-ESG compliance the report concludes that failure to implement ESG strategies will have long-term negative impacts on these companies' costs and sales, and their overall accountability.

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