Companies that embrace all aspects of environmental, social, and governance (ESG) action will outperform their peers, while those that are slow to recognize this theme’s importance will see an exodus of customers and a drop in profits far sooner than they ever imagined says GlobalData. Social inequality, corruption, tax avoidance, and climate change are all ESG issues that companies must address head-on, in full public view.

According to the leading data and analytics company’s report, Environmental, Social, and Governance (ESG) Framework, ESG will be the most important theme discussed in corporate boardrooms this decade. The report aims to help CEOs identify all potential ESG risks and implement mitigating actions to improve their company’s ESG performance.

While previous decades have witnessed environmental movements, the current wave of sustainability consciousness is unprecedented. Each new climate-related emergency, human rights violation, or corruption scandal reinforces the public opinion that companies must take meaningful steps, such as pledging climate action, to address ESG issues.

Luke Gowland, Analyst at GlobalData, comments: “ESG will continue to drive strategic and operational decisions for all corporate boards in a post-pandemic world. In fact, according to GlobalData’s ESG Strategy Survey 2021, 67% of ESG executives believe that the pandemic has acted as a catalyst for increased focus and action on ESG issues.”

While some companies are making concerted efforts to improve their ESG performance across many areas, others are simply paying lip service to the concept of sustainable profits. The market is scrutinizing corporate ESG strategies, making greenwashing increasingly difficult.

Rachel Foster Jones, Analyst at GlobalData, adds: “ESG is a complex and wide-reaching subject that is often approached in a piecemeal, reactive manner. There are no global standards for ESG reporting yet, so it can be difficult for CEOs to know where to start.

“The reluctance of some CEOs to fully engage with ESG can be attributed to the age-old view that it will hurt profits. However, GlobalData’s ESG Strategy Survey 2021 suggests the opposite- 70% of the 1,500 ESG executives that GlobalData surveyed believed that setting ESG targets positively impacted a company’s revenue.”

For access to the full report, email pr@globaldata.com