More on what executives think about ESG: Simmons & Simmons recently released the results of their new survey, A Sustainable State of Mind: Unlocking Growth and Profit, of 600 general counsels and C-Suite members along with 100 investors globally. The survey found that sustainability is going strong even in the face of business challenges, regulatory uncertainty and anti-ESG sentiment:
“84% of executives and investors believe that businesses that invest most effectively in sustainability will perform best financially in the next five to ten years.”
Regulation is certainly on executives’ minds, but more are prioritizing sustainability as a means to growth (65%) than as simply a compliance/regulatory obligation (42%). The overlap between human capital management and sustainability practices is also apparent from the survey results:
- 55% of investors want portfolio companies to improve access to talent through diversity and inclusion.
- 51% of executives are focused on attracting and retaining talent by making sustainability commitments.
- 58% of employers ensure sustainability commitments are put into practice to attract and retain sustainability talent. [Ed. note: Some cynicism may be appropriate on this particular point…]
While the growth mindset is popular, executives still worry about compliance and reputational risks:
- 53% said that regulatory penalties and litigation are their biggest sustainability-related fears
- 59% agreed that reputational damage of legal action is a bigger concern than any associated regulatory penalties.
While compliance risks remain a motivation, it appears more executives and investors see ESG for its growth opportunities. Companies can realize the potential of ESG by embedding it in their business models and viewing ESG as more than just a compliance checklist. However, an optimistic growth-driven mindset should be tempered by pragmatism, along with an understanding of associated regulatory and reputational risks. ESG can bring value to an organization, but only if real change gets made. If an organization greenwashes its ESG credentials, the downside will likely outweigh any potential gains.
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