We used our Business Tracker to survey 1,009 UK businesses (592 companies with up to £1m turnover and 403 £1m+) in March 2023 to get an updated view.
Despite lots of noise, familiarity with ESG is relatively low
So, whilst article after article is being written about ESG, familiarity amongst businesses is still limited. Some four in 10 (41%) claim some familiarity but most of these are only ‘quite familiar’ (32%) and we’re left with a third who don’t feel familiar at all (36%).
And businesses have so many other challenges
UK business and the economic environment has been in turmoil for so long now that ESG is relatively low on the agenda. Businesses are focusing on the here and now in the battle for survival.
The top four challenges (of 19 tested) which businesses are facing at the moment – and in the year ahead – are the same as what they were a year ago. These include:
- Rising energy and fuel prices
- Remaining profitable
- Coping with a drop in customer demand
- Cash flow issues
Do businesses feel there is limited challenge? Have they got ESG covered? Or is ESG just falling down the list with all the other immediate challenges businesses are trying to navigate? We think the latter.
Businesses have so many other priorities
Indeed, when asked directly how much of a priority five key areas were to their businesses, ‘introducing or acting on your organisation’s ESG policy’ was the least mentioned of the set.
That said, encouragingly, two thirds said it was a slight (33%), significant (27%) or one of their most important priorities (5%).
This suggests that whilst businesses consider other challenges to be more significant to their business, they do still consider ESG a priority for their business strategy. This bodes well.
Do businesses just talk the talk?
Three in five (59%) business decision makers thought businesses use ESG policies to promote their image without taking real action (i.e. ‘green or social washing’), but almost half thought businesses are, in general, improving their response to ESG (48%).
Over two in five (44%) feel that wider market events (i.e. Covid-19, the war in Ukraine, the cost of living crisis) has slowed or reversed their business’ focus on ESG. But positively, four in 10 (41%) agreed that ESG was a key component to their current business strategy.
Clearly, it’s a very mixed bag…
Whilst the majority don’t have an ESG policy, most businesses have taken some action
A quarter of businesses (26%) have an ESG policy/commitment in place. Equally a quarter (27%) have no policy or commitment and no plans to introduce one.
This is disappointingly similar to findings this time last year and a sign of the immense pressures businesses have been under this past year.
But, that said, the majority of businesses have taken some action. More than half (59%) have undertaken some kind of environmental action, four in 10 a social (42%) and/or a governance action (39%). This is to be celebrated.
So, whilst there is a will, the ‘way’ is mixed – will stakeholders be the catalysts?
It’s clear that some businesses are taking action around ESG, but with everything else businesses are dealing with, focus is limited and progress is inconsistent.
Will it be stakeholder voice that pushes the agenda? Perhaps not yet. Businesses felt that only four in 10 (41%) of their stakeholders care about ESG.
How do we accelerate the process, for the benefit of humankind? Businesses (particularly smaller businesses) need to see the business benefit as well as the human benefit of ESG if it is to become the priority it needs to be.
And yet there are so many ways that investing in ESG can reap rewards: environmental policies can save business revenue (by introducing more energy efficient processes and reducing waste); social policies can forge links with local communities (by driving loyalty and support); governance policies can improve risk management and limit supply chain failure – to name but a few.
Showing good and true ESG practices and commitment can help business attract and retain both loyal and good customers and employees.
What can we do? Stakeholders can make a difference. Our demand for better ESG will accelerate business necessity for it. We’re all customers and employees of businesses, some of us are suppliers and some shareholders.
We need to demand better.
Find out more
Click here to access the full report and see how ESG practices can help you to reach your business objectives.
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Our Business Tracker (used to conduct this study) monitors the recovery, resilience and adaption of UK businesses. It’s ideal for monitoring the latest pressures and challenges impacting UK businesses, or if you need to ask just a couple of questions to support your decisions – in a timely and cost-effective way. Click here to find out more.
And if you’d like to talk more about this topic or our wider research, get in touch with us at: [email protected]