A lack of regulatory guidance is preventing companies from investing more in environmental, social and governance (ESG) initiatives, new research has found.
After surveying more than 600 companies across the UK, US, and EU, risk management firm Alcumus found that 49% currently feel deterred from investing more in ESG.
This is mainly due to a lack of technical understanding and guidance from regulators, cited by 77% and 73% of respondents, respectively.
The increase in hybrid working, difficulty accessing data across organisations and supply chains, and a lack of necessary tools and technology, are also hindering ESG reporting, mentioned by 45%, 43%, 38% and 29%, respectively.
David Picton, senior vice president of sustainability at Alcumus, said that organisations are realising that, without meaningful ESG standards, they will struggle to attract customers, investors or employees in the future.
“ESG adoption is clearly now an irreversible global trend, but data will make all the difference to the credibility and authenticity of ESG reporting,” he continued. “Companies recognise this, and as an industry we must work with them to make it happen.”
Despite the various ESG challenges, the survey also found that 90% of companies now adopt ESG considerations in their corporate strategy, while 67% invest in systems and technology to obtain data and make progress measurable.
The trend is more pronounced among larger companies with 250 staff or more. Among these, 94% adopt ESG, and 71% have invested in systems and technology to capture data.
Moreover, the findings show that ESG is having a “large” or “very large” impact on 65% of the companies surveyed, rising to 73% among larger firms.
“These are still tough times, but companies are not just in survival mode, there is a clear focus on 'building back better' post-pandemic,” Picton said. “Many are using the situation as a catalyst to revisit the viability of their business models and make changes to thrive in the future.
“Addressing ESG plays a key part in this, but to demonstrate long-term impact and change, it is critical to have data and evidence.”
Image credit: iStock
Author: Chris Seekings