According to KPMG's Global CEO report, 69% of senior executives recognise the importance of ESG initiatives to their businesses with a greater demand from stakeholders for increased reporting and transparency on ESG. However, worryingly, amid fears of recession, the KPMG report has identified that half are pausing or reconsidering their existing or planned ESG efforts in the next 6 months, and 34 percent have already done so.
With the current economic uncertainty, it is understandable that businesses are questioning their priorities and spending plans, but ESG initiatives should not be an automatic casualty. In fact, now may be the time to invest strategically in ESG initiatives that are aligned to key business needs.
With increasing scrutiny from employees, customers, investors, shareholders and other stakeholders, a well considered ESG strategy is no longer simply a “nice-to-have” add-on - it is an essential part of doing business.
A successful ESG strategy is not just about ensuring compliance and helping ensure that businesses operate responsibly, but crucially it is about developing competitive advantage and ensuring long term sustainability.
With the fears of a recession, it can be tempting to focus on the short term, but there are real long term opportunities for businesses to capitalise on by aligning their ESG strategy with their business needs.
In the HR world, one of the key challenges most organisations are facing is the "war for talent". I have heard rumours that "talent" has won the war, but either way, there is a clear need for businesses to demonstrate their wider social commitment and with greater scrutiny it is not enough to talk a good game. A good ESG strategy must be authentic and consistent and organisations need to show how they are actually walking the walk on ESG in order to attract and retain talent.
So, while there may need to be a re-evaluate and prioritise, it is not the time to ditch ESG initiatives. In fact, it may actually be time to double down on ESG commitments and those organisations who maintain a consistent and authentic approach will be well placed to develop significant competitive advantage when we come out of the other side of the downturn in the market.
However, ESG has become a major business imperative and as Pallett expresses shouldn’t be overlooked or taken for granted. As a matter of fact, delaying key ESG notions and aims can actually negatively affect a business to the point of decreased transparency, sustainability, resilience and more.