March 16, 2022
It wasn’t long ago that drafting a catchy mission statement, writing a check or two to a local charity and instituting an in-office recycling program was sufficient evidence of a company demonstrating its sustainability and corporate responsibility commitments.
Today, however, it’s a different story.
An increasing consumer and investor focus on climate change and sustainability, social justice and equity, and corporate responsibility has spurred a revolution prioritizing environmental, social and governance (ESG) progress among global companies. In this new era of accountability, true organizational commitment isn’t as much of a choice as it is the cost of doing business.
Workiva, an Iowa-based SAAS company that provides finance, accounting, risk and compliance reporting tools for global businesses, released survey findings in conjunction with a third-party research firm last year on the ESG attitudes of over 4,000 individual investors throughout the United States, United Kingdom, Germany and France.
Key findings from the survey include:
- Younger investors have the greatest existing awareness of ESG in investments (84% of respondents ages 18-34 and 62% of respondents age 55+ stated they have heard about ESG).
- Company ESG performance had become a more important consideration for investments over the prior year period to half of all respondents, and most (67%) felt it would continue to become more important due to climate change.
- ESG data is becoming a larger consideration when deciding where to invest—43% of respondents noted they prefer this information in the form of data and numbers rather than qualitative descriptions and assessments. More than half (52%) noted that they would be more likely to invest in a company that could demonstrate its ESG performance and that they want to know that their moral beliefs align with a company before investing.
- Respondents noted a demand for ESG data they can trust, with 64% stating they currently find it challenging to judge whether a company is doing the right thing, and 50% said they find it difficult to trust companies when they promote what they are doing for the environment and society.
- 70% of survey respondents felt companies should be held responsible for demonstrating their ESG performance when attracting investors, and 72% said they believe that it should be easier for ordinary investors to judge how companies behave toward society and the environment. Almost two-thirds (64%) believe ordinary investors should put pressure on companies to become more transparent about their ESG performance.
With more investors and consumers demanding robust ESG reporting, transparency and action, it is critical for companies to have a clear and well-constructed plan to communicate their intentions, goals and progress in a way stakeholders can verify and trust.
Having a defined communications strategy that emphasizes reporting in alignment with global standards, and in conjunction with rating agency guidance, has become the benchmark for responsible disclosures that meet stakeholder expectations.
If you don’t know where to start, you’re not alone. Navigating the ESG waters can be a complex undertaking. The good news is that it need not be a solo venture.
There are an increasing number of consultancies dedicated to helping lead companies through the corporate responsibility maze. Doing your research, asking for referrals and searching for those with sector-specific experience can lay the groundwork for a successful partnership. You just have to be willing to look, and take the first step, to get the help you need to guide you on your ESG journey.
Your customers and investors will be glad you did.
If you’d like to talk about your sustainability planning and ESG reporting objectives, email me.