For 63% of companies with an ESG (environmental, social and governance) focus, following sustainability principles has had a positive impact, according to a global survey of 4,000 mid-sized companies by Moore Global. However, a number of potential difficulties were also identified by surveyed company executives in the context of additional regulations that will be introduced in the near future, including sustainability audits across companies' supply chains.
The Centre for Economic and Business Research (Cebr) was commissioned by Moore to carry out research in 12 key countries around the world1 to assess the attitudes and doubts of managers of operating companies towards ESG and the trends in these attitudes and doubts. The questions partly explore the impact of new regulations that will be introduced in the near future - one element of which is that all companies, regardless of size, will need to be able to demonstrate that their entire supply chain is sustainable, regardless of where they operate.
Although the introduction of additional changes is often criticised for holding back economic growth, 57% of business leaders expect them to have a positive impact on results. Optimism is strongest among firms in catching-up economies. With the forthcoming extension of ESG regulation, 45% of business leaders are unsure whether their organisation is adequately prepared for the changes. 39 percent of them see this as due to complex requirements, 38 percent cite a lack of related information and guidance, and 36 percent cite a lack of internal resources and expertise. 30 per cent said that previous regulatory changes had also caused some disruption.
| In the context of a particular company or country, ESG is the environment (Environmental), a society (Social) and the governance (Governance) assess relevant factors from a sustainability perspective. Its aim is to enable actors (consumers, investors, etc.) who come into contact with economic entities (firms, companies, countries) at any point in the value chain to objectively assess their activities from a sustainability perspective and make decisions. |
Of the medium-sized companies surveyed, 46% said they already have a comprehensive ESG strategy in place, while a further 42% have measures in place but „see room for further improvement”. Preparations are also underway globally as part of the preparations for the forthcoming regulation, but with very different intensity in different regions. In the US, 42% of companies surveyed have already restructured their operations in line with the forthcoming legislation. The comparable figures for the European countries surveyed range between 30 and 35 percent. The biggest laggards Japan in preparation, there is only the 11 percent of companies comprehensive steps to ensure future compliance.
The increased focus on ESG has already been reflected in the performance of the medium-sized companies surveyed. Almost two-thirds of CEOs said it had boosted both their company's revenues and profits. While among firms more committed to ESG revenue growth averaged 10 percent between 2019 and 2022, the figure was only 4.5 percent for the less committed. While in the former group, respondents 79 percent of respondents reported that, that during this period improved customer retention rates, in the last round the figure was only 47%.
„The results of this study, one of the most comprehensive research summaries on the topic to date, show that the majority of mid-sized companies, which are the engine of the global economy, see ESG compliance as a way to reduce regulatory compliance, capital return and reputational risks. They are willing to change decades-old ways of doing business - said Éva Buru, Head of ESG Business Unit at Moore Hungary. - It is clear that the business reality for medium-sized companies is very different from the pre-Covid era. However, by adapting to change (and a key part of this is ensuring sustainability), most have been able to improve their performance effectively.”
Whatever the size of a business, integrating ESG considerations into its operations can already provide a significant competitive advantage in the medium term, both through risk analysis, more efficient operations and the identification of innovation opportunities.„Those who want to operate more confidently in a domestic or international environment should see ESG not as a liability but as an opportunity” added the Moore Hungary expert.
| The research also included the identification of other operational risks. 85% of the medium-sized companies surveyed are concerned that cyber-attacks could negatively affect their financial situation. 55 percent believe the likelihood of such an attack is higher now than it was five years ago. Supply chain disruption is also a major risk, with 45% of decision-makers now more likely to see it than half a decade ago. |
A summary of Moore Global's analysis can be downloaded here:
https://www.moore-global.com/intelligence/articles/october-2024/sustainability-from-buzzword-to-business-critical
1 Australia, Australia, Belgium, Brazil, Germany, Italy, France, Italy, Japan, Netherlands, United Arab Emirates, United Kingdom, South Africa, United States of America
Moore Hungary
Moore Global, which started in a London office more than 110 years ago, is now one of the world's leading consulting and audit networks. Present in over 100 countries worldwide, the network has more than 600 independent offices and over 30,000 employees. The group's turnover for the last financial year exceeded $3 billion.
Moore Global's services will be directly available in the domestic market from March 2021. Moore Hungary has been offering a full range of consulting services in the fields of business, financial, tax, accounting and auditing with a team of almost 100 experts since its inception.
In our fast-changing world, Moore provides strategic guidance and practical advice to help clients navigate and understand the complex regulatory and changing market environment and industry conditions, and thereby find the best solutions.
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