While an increased focus on environmental sustainability remains a top priority for consumers and business executives, inadequate data is a key challenge for both groups when it comes to achieving personal and corporate environmental, social and governance (ESG) goals.
This is according to a new IBM Institute for Business Value (IBV) study – The ESG ultimatum: Profit or perish.
The study reveals that surveyed executives point to inadequate data (41%) as the biggest obstacle to their ESG progress, followed by regulatory barriers (39%), inconsistent standards (37%), and inadequate skills (36%).
Without the ability to access, analyse and understand ESG data, companies struggle to deliver greater transparency to the consumer – a key stakeholder – and meet consumer expectations.
Seventy-four percent of surveyed executives believe that stakeholders understand their organisations’ ESG objectives and performance, yet only about 4 in 10 surveyed consumers feel they have enough data to make environmentally sustainable purchasing (41%) or employment (37%) decisions.
“Consumer commitment to environmental sustainability and social responsibility has intensified with consumers voting with their wallets,” says Jonathan Wright, global managing partner, Sustainability Services and Global Business Transformation at IBM Consulting. “As a majority of consumers choose to buy from and work for ESG leaders, businesses must prioritise transparency and break down barriers to ESG data.”
Other study findings include:
Companies are investing in ESG and see it as good for business
- 76% of surveyed executives say ESG is central to their business strategy.
- Almost three in four surveyed executives (72%) view ESG as a revenue enabler rather than cost centre, suggesting that contrary to popular opinion, ESG and profitability are not at odds.
- 76% of executive respondents agree or strongly agree that their organisation focuses on achieving ESG outcomes, not just reporting requirements.
Consumer commitment to sustainability has intensified, but consumers don’t feel they have sufficient information to make informed choices
- Roughly two-thirds of surveyed consumers say environmental sustainability (68%) and social responsibility (65%) are very or extremely important to them.
- While more than half (51%) of respondents say cost of living increases have made environmentally sustainable decisions more difficult in the last 12 months, roughly six in 10 say at least half of their purchases were branded environmentally sustainable or socially responsible.
- Only one in three surveyed consumers say they have sufficient information to make sustainable investing and saving decisions.
Executives admit their companies haven’t made significant progress toward ESG goals, indicating data challenges impact their ability to measure progress and meet consumer demands
- 95% of surveyed executives say their organisations have developed ESG propositions. However, only 10% say that their organisations have made significant progress against them.
- Almost three in four surveyed executives (73%) say their organisations struggle to manage an overload of manual data, while seven in 10 say they have difficulty consolidating or manipulating data.
“Data is the lifeblood of ESG,” says Wright. “Now is the time for enterprises to act. By operationalising ESG plans, enterprises are putting information in the hands of operators who can make informed business decisions that can improve their ESG impact on a daily basis.
“Organisations looking to increase stakeholder support and meet ESG reporting requirements should implement a sustainability roadmap that is inclusive of technologies, services, and ecosystem partners that can position them for greater business success and help them address regulatory compliance,” he says.