ESG metrics: UK Leading the Charge

ESG stands for Environmental, Social and Governance, also commonly referred to as sustainability. In a business context, sustainability is about the company’s business model. Hence, how its products and services contribute to sustainable development, and how operations are managed to minimise any negative impact.

Navex Global revealed the UK-specific statistics of its ESG Survey. The report revealed that 60% of UK companies, compared to 66% of US companies, said they are planning to increase spending on ESG factors in 2021. More than three-quarters of businesses upped their investment in ESG activities last year (67%) and crucially, environment firmly tops the priority list of ESG objectives (55%) with 60% planning a spending uplift this year.

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. 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 Giles Newman, managing director, International at Navex Global. “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.”

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.