Accelerating ESG's impact
Global CEOs see the importance of environmental, social and governance (ESG) initiatives on their businesses, especially when questioned about ESG’s impact on improving financial performance, driving growth and meeting stakeholder expectations. And this year’s survey shows a marked jump in demand from stakeholders — such as customers and investors — for increased transparency.
CEOs increasingly agree that ESG programs improve financial performance, sitting at 45 percent, an increase from 37 percent one year ago. When asked where CEOs see corporate purpose having the greatest impact over the next 3 years, driving financial performance is in the top spot with 73 percent. CEOs increasingly understand that businesses embracing ESG are best able to secure talent, strengthen employee value proposition (EVP), attract loyal customers and raise capital. ESG has gone from a nice-to-have to integral to long-term financial success.
● 69 percent see stakeholder demand for increased reporting and transparency on ESG issues up a significant extent (up from 58 percent in August 2021)
● 72 percent of CEOs believe stakeholder scrutiny on ESG will continue to accelerate (up from 62 percent in August 2021)
● 17 percent of CEOs indicate stakeholder skepticism around greenwashing is increasing (up from 8 percent in August 2021)
Changing regulations and other pressing global economic matters are CEOs’ biggest challenges in delivering their ESG strategies. CEOs are also increasingly aware there is a lack of an accepted global framework for measuring and disclosing ESG performance (14 percent, up from 7 percent in August 2021). While regulation concerns remain high, this may highlight how global governments and regulators need to work together to align around ESG requirements.
● Investments are forthcoming: Sixty-two percent of CEOs say they will be looking to invest at least 6 percent of revenue in programs that enable their organization to become more sustainable.
● Key drivers: Global CEOs find it difficult to pick just one key driver when it comes to accelerating their companies’ ESG strategies: proactivity on social issues (34 percent), more transparency (26 percent), inclusion, diversity and equity (IDE) strategy (21 percent) and net-zero strategy (19 percent). This shows there’s a growing consensus that they all matter.
● Articulating their story: The biggest challenge for CEOs’ in communicating their ESG performance to stakeholders is the struggle to articulate a compelling ESG story, which more than one-third (38 percent) of CEOs say their organizations face.