Executives Say Big Increase in ESG and Sustainability Investment Coming

by | Oct 4, 2021

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More than half of senior executives responsible for environmental, social and governance (ESG) initiatives as well as sustainability issues say their firms will have double-digit increases in spending toward the efforts in 2022 and will prioritize funding related to supply chain sustainability, according to a survey released by research firm Verdantix.

Businesses are being spurred into action by increased stakeholder pressure on ESG and developing regulatory aspects of the issues, Verdantix says in its Global Corporate Survey: ESG And Sustainability Governance, Strategies And Priorities.

A quarter of executives say improving supply chain sustainability is their top priority over the next two years. Additionally, the survey found that 26% of CEOs view ESG among the top three issues their companies are currently focusing on.

The survey also found climate change policy development is the most significant driver for increasing corporate involvement in sustainability issues over the past year.

About a third of the executives who responded to the Verdantix survey say a lack of clarity on reporting standards holds back ESG efforts for their companies. Around the same number of respondents indicate ESG data complexity is a significant barrier to their goals.

Reporting and accountability of supply chain ESG efforts can get in the way of improving ESG goals and that was the focus of a recent ISN report, where it found that 60% of companies it surveyed had implemented such sustainability efforts but fewer than 7% actually tracked their impacts. Supply chain ethics is also an issue, with close to half of respondents in an OpenText survey saying they wouldn’t purchase from companies that weren’t accountable for how their products were sourced.

As those issues continue to be tackled and Verdantix says as ESG investments become a priority, potential changes in regulation will increase spending immensely. Regulation on supply chain ethics has already been increasing in many areas.

With more executives focused on increasing ESG and sustainability investment, companies that have shown to have people experienced in the area have had greater success on their initiatives than those that don’t have as many connections. Boards members who have experience with multiple companies have proven to have the most success in the area.

Improving IT systems for environmental performance and to provide metrics in the area are among the highest priority for the increased spending, according to the Verdantix survey. It found 51% of the respondents put an emphasis in that area.

The survey says 43% of participants consider the pandemic a main reason for company executives to increase attention to ESG efforts.

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