Companies’ vision to reach net-zero carbon emissions is driving top-management decisions to increase expenditure on environmental, social, and governance (ESG) goals in order to significantly influence growth in market performance.
To establish this, GlobalData, a leading data and analytics company, conducted an ESG Strategy Survey 2021, aimed at highlighting the importance of setting and investing in ESG related goals and the likely positive impact on market performance.
GlobalData’s survey showed that 80 per cent of respondents reported that their companies plan to increase spending on ESG issues to meet targets, while 78 per cent of medical device sector companies surveyed, plan to increase ESG investments between 2021 and 2026 to meet ESG goals.
Additionally, 70 per cent of the 1,500 ESG executives interviewed believe that setting ESG targets will positively impact company revenue. Therefore, ESG related factors will increasingly be involved in driving operational decisions and corporate strategies.
Selena Yu, Medical Devices Analyst at GlobalData, said: “Since the new generation of consumers have a greater sense of global responsibilities, acting against climate change, integrating socially sustainable practices, and implementing transparency and accountability in governance will attract more customers, partners, and employees.
“The survey highlights that 69 per cent of respondents agreed that their companies will change policies and practices to meet ESG goals. Moreover, 98 per cent surveyed believed that incorporating ESG factors is very important in company decision-making.”
Selena Yu
Increased Transparency and Accountability Needed
Stakeholders are demanding increased transparency and accountability from companies which is driving changes in ESG issues. For example, hundreds of companies are pledging to reach net-zero carbon emissions in the next 20-30 years. And many companies are helping to drive social change by donating money to help underserved communities.
“… Some companies are using artificial intelligence systems to expose and eliminate corruption and fraud before it takes place. These companies pioneering change will demonstrate that accounting for ESG issues in strategic planning and decisions are both possible and brings market value.”
Selena Yu
According to GlobalData’s ESG Strategy Survey 2021, 67 per cent of ESG executives believe that the Covid-19 pandemic has acted as a catalyst for increased focus and action on ESG issues.
Indeed, sustainability issues used to be just about saving the planet, but now, it has morphed into an umbrella term for environmental, social, and governance (ESG) issues. In an earlier report, GlobalData maintained that companies that embrace all aspects of environmental, social, and governance (ESG) action will outperform their peers.
While some companies are making concerted efforts to improve their ESG performance across many areas, others are simply paying lip service to the concept of sustainable profits, GlobalData reiterated. Currently, the market is scrutinizing corporate ESG strategies, making greenwashing increasingly difficult.
ESG will continue to drive strategic and operational decisions for all corporate boards in a post-pandemic world. Social inequality, corruption, tax avoidance, and climate change are issues that companies must address head-on, and do so transparently, in full public view.
