Enterprises downgrade ESG investments amid economic uncertainty, Google Cloud study finds
The difficult macroeconomic surroundings is prompting enterprises to deprioritise investing in surroundings, social and governance (ESG) initiatives in favour of actions that can ship shorter-term income development.
So a lot so, ESG initiatives have gone from being the highest organisational precedence for enterprises the world over in 2022 to a number-three precedence this 12 months – as companies discover themselves below stress to chop prices.
That’s in response to the second annual Google Cloud-sponsored sustainability survey, which polled 1,476 top-level executives from 16 nations about their firm’s ESG funding priorities.
The survey, performed on Google Cloud’s behalf by The Harris Poll, revealed that respondents felt they have been unable to ship on their ESG ambitions as they have been having to “do more with less” due to the weakened economic system, and being inspired to spend extra time engaged on initiatives which might be prone to generate income.
“The inability to execute, pressured by fewer resources, threatens to compound previous risks, unless executives take the appropriate steps,” wrote Justin Keeble, managing director for international sustainability at Google Cloud, in a weblog put up. “These include greater accountability, better measurement and management, and well-defined leadership.”
He additionally cautioned enterprise leaders in opposition to seeing ESG initiatives as a cost-cutting alternative, as a result of there may be mounting proof that customers usually tend to have interaction with sustainable manufacturers.
“Looking at sustainability as a short-term cost instead of a long-term investment is a missed opportunity,” mentioned Keeble. “The vast majority (85%) of executives acknowledge customers are more likely to engage and do business with sustainable brands, but 78% are now forced to achieve sustainability results on less money than before.”
This 12 months’s outcomes additionally echoed among the findings from the inaugural survey, which was printed in April 2022, that confirmed there was an urge for food inside enterprises to do extra on the sustainability entrance, however an absence of expertise and information means senior leaders are uncertain of the place to start out and focus their efforts.
On this level, Keeble mentioned 72% of respondents acknowledged that everybody of their firm desires to assist “advance sustainability efforts” however no-one is aware of how, which is a 7% improve on final 12 months.
At the identical time, the ballot additionally revealed that enterprises are struggling to become familiar with who must be accountable for making sustainability-related selections of their organisations, with 84% stating they assume their inexperienced efforts could be simpler if that they had a greater firm construction with clear accountability.
“Executives believe having a dedicated leader who would govern sustainability initiatives is the number one action to help advance sustainability efforts,” wrote Keeble. “Coupled with strong leadership, 83% believe agile team structures will help them achieve their goals. With better measurement, clear decision-making and some creativity, companies can better position themselves to progress on their sustainability and business goals.”
Elsewhere, the ballot revealed that greenwashing stays a pervasive concern among the many respondents, with 59% admitting to overstating their firm’s sustainability actions.
“Many believe greenwashing is accidental and underscores the need for accurate measurement, identifying a lack of tools as one of the biggest barriers to true progress,” he mentioned. “Executives are looking forward to higher methods to trace their progress, with 87% of respondents trying to incorporate higher measurement into their organisations to assist make extra correct targets.
“Measurement is critical,” added Keeble. “But coupling accurate measurement tools with more ambitious targets is where we believe there is untapped opportunity.”
