23rd March 2021, London – NAVEX Global®, the leader in integrated risk and compliance management software, today revealed the UK-specific statistics of its Environmental, Social and Governance (ESG) Survey. The report revealed that UK companies were ahead of their US counterparts by 8%, as it relates to having a formal process or programme in place for measuring and reporting on ESG metrics. But the gap could be closing fast. Only 60% of UK companies, compared to 66% of US companies, said they are planning to increase spending on ESG factors in 2021 — suggesting that US businesses are also committed to sustainability causes.
Increased spending on ESG across both markets makes sense considering that 49% of the respondents in these regions said that a business’ brand reputation is impacted by performance against ESG metrics. And more than two fifths (44%), also agreed that a publicly-traded company’s ESG ratings would influence their personal investment decision about that company’s stock — making ESG a bottom-line imperative.
Giles Newman, Managing Director, International at NAVEX Global said, “For many years now the big four accounting firms have been talking about the triple bottom line — an accounting framework with three parts: social, environmental and financial — and how this will impact the long-term success of companies. As we emerge from lockdown in the UK, and companies look to grow, it makes sense that there’s an increased commitment to measuring and improving ESG metrics.”
A step-change in ESG is inevitable, as the generational guard changes
Beyond just the UK and US, a paradigm shift in businesses’ approach to ESG is coming globally as new generations enter the workforce and become leaders. This is evidenced by the findings in the Survey. Responses revealed that Millennial leaders are more favourable to ESG initiatives than their Generation X or Baby Boomer counterparts. In fact, for companies that did not already have ESG programmes in place, 64% of millennials (24-39-year-olds) believed they should, vs. 55% of Gen X (40-55-year-olds) and 38% of older leaders (56+).
It was further revealed that Millennials are more likely to connect a company’s reputation to environmental factors than older generations, with 55% believing environmental factors are most important to their company’s reputation, compared to 44% of Gen X respondents and 48% of older respondents. Millennials were also most likely to consider ESG factors in their own investment approach, with 45% saying ESG ratings would influence their stock-buying decisions, vs. 37% of Gen X respondents and 36% of older respondents.
“As business leadership is passed to a new generation, there’s no doubt in my mind that ESG will move higher up the boardroom agenda” said Mr. Newman. “It’s evident from the findings of this survey that ESG now has to be about more than simply making statements of intent. ESG factors will be fundamental in ensuring a healthy bottom line, protect corporate reputations, and will very likely have real-world consequences on a company’s ability to attract and retain both investment and talent in the future.”
About NAVEX Global’s Environmental, Social and Governance Survey
The Environmental, Social and Governance (ESG) Survey was conducted in December 2020 by OnePoll on behalf of NAVEX Global. It was set up to gauge corporate commitment to ESG programs and performance. The respondents included 1250 managers and senior leaders at larger companies (more than 500 employees) in the US, UK, France and Germany.
About NAVEX Global
NAVEX Global is the worldwide leader in integrated risk and compliance management software and services. Our solutions are trusted by thousands of customers around the globe to help them manage risk, address complex regulatory requirements, build corporate ESG programs and foster ethical workplace cultures. For more information, visit NAVEX Global’s website and our Risk & Compliance Matters blog. Follow us on Twitter and LinkedIn.