ESG strategy

Only one-third of companies have ESG strategy, reveals GlobalData

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According to GlobalData, a reputable data and analytics firm, investors and stakeholders are placing greater emphasis on sustainability and social responsibility, causing companies to be held accountable for their environmental, social, and governance (ESG) performance. Nevertheless, meeting ESG objectives proved to be a formidable obstacle for businesses in 2022, casting doubt on the sustainability of their operations in the long run.

Based on GlobalData’s ESG Sentiment Polls Q4 2022, it was found that merely 32% of participants confirmed that their company implemented an ESG strategy. This indicates that the larger proportion of respondents (68%) either lacked an ESG plan (34%) or were uncertain about its existence (34%).

Cyrus Mewawalla, Head of Thematic Intelligence at GlobalData, comments: “The reluctance of many CEOs to fully engage with ESG can be attributed to the age-old view that it will hurt profits. However, our research suggests the opposite. Companies that embrace all three elements of ESG will outperform their peers. CEOs that are too slow to improve their company’s approach to sustainability will see an exodus of customers and a drop in profits far sooner than they ever imagined.”

According to the “Global Environmental Trends by Sector, 2022 – Thematic Intelligence” report from GlobalData, climate change and its associated issues, such as heatwaves, emissions, deforestation, and water shortages, remained a key focus in 2022. In response, financial institutions, businesses, and governments have taken significant steps towards adhering to the United Nations’ Sustainable Development Goals (SDGs), and this trend is predicted to continue into 2023.

GlobalData has created an ESG framework that acts as a beneficial management tool to assess a company’s ESG performance. This framework aids in recognizing the contributing factors that result in negative ESG consequences and provides valuable insights into the necessary steps that can be taken to improve a company’s ESG performance.

Mewawalla concludes: “As the world continues to grapple with climate change and other environmental challenges, the importance of ESG performance is only set to grow. The growing efforts of financial institutions, businesses, and governments to align with the UN’s SDGs demonstrate a growing recognition of the urgency of the challenge at hand. Companies that embrace this trend and take meaningful action to improve their ESG performance are likely to be the ones that thrive in the years to come.”

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