Public expectations for authentic and urgent action on environmental and social issues remains high despite cost-of-living pressures, according to the third annual ESG Monitor from SEC Newgate.
Although the term ESG is not well understood among the UK public, expectations for corporate action on ESG issues has reached a tipping point, suggesting that the need for action is no longer up for debate. Almost three quarters (70%) of people think it is important for companies to act on ESG, while 63% think that companies should speak out on issues that are important to their employees and customers.
“We know some companies are staying quiet about their actions because they are worried about being accused of being ‘woke’. However, the clear thread that runs through our ESG Monitor in 2021 and 2022, and which is confirmed in the 2023 report, is that people care deeply about ESG and they expect corporates to show leadership in delivering positive environmental and social outcomes,” said Fiorenzo Tagliabue, group CEO of SEC Newgate.
“The public wants action and wants companies to talk about what they are doing. They think being a chief executive means acting like a leader. Shying away from taking a position on issues that are important to their customers and employees is no longer an option.”
Greenwashing
However, despite high expectations on companies to undertake action on ESG issues and initiatives, only a third (31%) say companies in the UK are using their power and influence for positive change, and some 60% do not believe companies who say their overall purpose is more important than making a profit. Additionally, less than a quarter of people (23%) feel that large companies are performing well when it comes to acting responsibly on ESG.
According to the report, the issue of trust is further exposed by the salience of ‘greenwashing’. In the 2023 edition of the ESG monitor, 54% of respondents said they had heard of greenwashing compared to the 43% that had heard of ESG. In fact, 58% of respondents rated greenwashing as a big problem in the UK.
Meanwhile, communication is considered a critical part of breaking down trust barriers. Seven in ten people (68%) suggested that there should be a consistent approach for companies to report their ESG performance, and 67% also agreed that the Government should be playing a bigger role to ensure there are better regulations for environmental marketing claims and that these should be enforced.
“ESG has come under intense scrutiny in the past 18 months, with some right-wing political pushback that accuses it of being ‘woke capitalism’. However, our study shows that the big issues that sit behind ESG, such as addressing climate change, being a good employer and delivering positive impact to communities continues to sit high on public agendas and have a fundamental impact on how corporate reputation is judged,” commented Andrew Adie, head of Green & Good and managing director at SEC Newgate.
“While we can expect to see ESG continuing to be scrutinised, the genie is not going to be put back in the bottle and corporates are expected to act responsibly and to prioritise environmental and social impact as much as they prioritise profit.”