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ESG (Environmental, Social, and Governance) Strategy Survey 2021 – Thematic Research

Environmental, social, and governance (ESG) are the three key factors to consider when measuring a company’s sustainability. The primary goal of this survey is to shed light on the extent to which companies are setting up and implementing ESG plans.

The survey respondents include 1,500 influential ESG leaders and executives worldwide consisting of senior directors, directors, VP, AVP, head, and managers spread across more than 20 industries.

What are the key take outs from the survey?

ESG will be the critical theme impacting companies this decade, but COVID-19 is still dominating their attention in the short term. An overwhelming majority of the respondents thought that companies should have targets in place to meet ESG goals. Sectors like packaging, mining, oil gas, automotive, and power tend to rank higher than others in the metrics that measure ESG importance, goal setting, and investment. Most respondents thought that, of the three ESG factors, the environment was the most important for their sector. Worryingly, significant majorities said that governance was both less important and the focus of less investment.

Most respondents saw customer satisfaction, a cleaner environment, and improved reputation as the main benefits of an excellent environmental record, rather than employee morale, shareholder satisfaction, and revenue growth. Most companies are prioritizing the health and safety aspect of social sustainability. This is highly regulated, and the consequences of health and safety failures can be fatal for workers and communities in which companies operate. Of all aspects of ESG, it is governance factors that are most in need of improvement. Most respondents of the survey claimed that their companies conducted risk assessments, and that executive pay was linked to governance targets.

What are the different types of ESG factors?

Environmental factors: Overall, climate change was the most important environmental factor. However, in sectors like automotive and oil and gas, more respondents said that pollution was more important. In the public discourse, environmental sustainability is often linked to economic costs Nonetheless, a large majority of our respondents said that setting and implementing environmental performance targets has a positive impact on revenue.

Social factors: Most companies have human rights policies in place but there is room for improvement in assessing human rights performance. Health and safety complaint handling systems are more widespread than complaints systems designed to deal with racial, gender, or sexual discrimination. More than a fifth of respondents said that their companies did not have a system in place to process discrimination complaints.

Governance factors: A minority of respondents said that ethics and corruption and bribery were the most important factors. Oil and gas, insurance, and banking and payments companies value risk management the most due to the risk involved in their operations. A relatively high number of respondents claimed that their companies had faced legal action for potential regulatory breaches. This may be an indicator that legislation is tightening up and that regulators are following through on implementing it.

What were the major insights from the surveys?

COVID-19 will continue to dominate the attention of businesses over the next 12 months. When asked to choose which themes would impact their business the most in the next 12 months, respondents ranked ESG second, behind COVID-19 but well ahead of other themes such as digital transformation, increased regulation, and trade disputes. The sectors that expect ESG to have a high impact all have environmental concerns. Packaging, which had a clear lead in this metric, was followed by oil and gas, mining, and power. This indicates an awareness in these sectors that change will be needed and that environmental policies will impact them. Majority of the respondents thought that ESG should play a major role in investment decisions. There are, however, regional and industry variations. Aerospace, defense, and security sits at the low end of industries that think that ESG should play a role in investment.

For most respondents, pressure from customers determines whether a company sets up an ESG performance plan. This is followed by pressure from investors. The results indicate that a majority favor acting before legislation and government pressure forces a response. Most respondents did not think that a desire to improve financial performance should lead to the implementation of an ESG plan. Significant majorities placed a desire to improve financial performance and pressure from workers as the least important factors.

Survey report scope

Survey year 2021
Respondents’ category 1,500 influential ESG leaders and executives worldwide consisting of senior directors, directors, VP, AVP, head, and managers spread across more than 20 industries
Regional coverage North America, South & Central America, Europe, Asia-Pacific, and Middle East & Africa
Sectors covered in survey Impact of COVID-19, Environmental (Climate change, pollution, biodiversity, natural resources), Social (Human rights, diversity & inclusion, health & safety, community impact), Governance (Corporate structure, risk management, corruption & bribery, ethics)

Table of Contents

About GlobalData’s ESG Strategy Survey 2021

Executive Summary

ESG Sentiment

ESG Investment Priorities

Deep Dive: Environmental Factors

Deep Dive: Social Factors

Deep Dive: Governance Factors

Survey Design, Demographics, and Methodology

Thematic Research Methodology

Frequently Asked Questions

ESG ranks behind COVID-19 in short term focus, but well ahead of other themes such as digital transformation, increased regulation, and trade disputes.

The sectors that expect ESG to have a high impact, all have environmental concerns. Packaging, led the ESG metric, followed by oil and gas, mining, and power.

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