A new study from IBM’s Institute for Business Value has found that over two-thirds of executives view ESG as a revenue enabler rather than a cost center, as the policy continues to attract conflicting shareholder concerns including an argument that ESG and profitability are at odds.
The study published as part of an April 17 press release, found that 76% of the 2,500 surveyed multinational executives consider ESG as being central to their business strategy, with 72% calling it a revenue enabler.
The analysis states that ESG leaders, a sub-set of respondents with greater maturity in operationalizing ESG, are seeing “higher revenue, improved profitability, and deeper customer engagement” by approaching ESG as a transparency play that creates strategic business opportunities.
Executives also noted that inadequate data is the biggest obstacle to their ESG progress, followed by regulatory barriers, inconsistent standards, and inadequate skills.
“Without the ability to access, analyze and understand ESG data, companies struggle to deliver greater transparency to the consumer – a key stakeholder – and meet consumer expectations,” the IBM study found.
“Consumer commitment to environmental sustainability and social responsibility has intensified with consumers voting with their wallets…As a majority of consumers choose to buy from and work for ESG leaders, businesses must prioritize transparency and break down barriers to ESG data,” said Jonathan Wright, global managing partner of sustainability services and global business transformation at IBM.
The study also highlighted that while 95% of executives say that their organizations have developed ESG propositions, only 10% say that significant progress has been made against them.
“Data is the lifeblood of ESG. Now is the time for enterprises to act. By operationalizing ESG plans, enterprises are putting information in the hands of operators who can make informed business decisions that can improve their ESG impact on a daily basis,” Wright contended.
He concluded that organizations looking to increase stakeholder support and meet ESG reporting requirements should implement “a sustainability roadmap” that is inclusive of technologies, services, and ecosystem partners, that can position them for “greater business success and help them address regulatory compliance.”