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Enterprise business leaders are struggling to hit corporate environmental, social and governance (ESG) goals because of inadequate data.
That’s according to The ESG ultimatum: Profit or perish report by the IBM Institute for Business Value, which revealed that while environmental sustainability remains a top priority for consumers and business leaders alike, the bulk of respondents said “inadequate data” is holding their enterprises back when it comes to realising their ESG ambitions.
Inadequate data is also leaving enterprises open to accusations of greenwashing, the report stated. “Consumer are increasingly sceptical of ESG claims,” it said. “Only 20% of consumers say they trust the statements companies make about environmental sustainability, down from half just two years ago.
“What’s causing this decline? A lack of progress is partly to blame,” the report continued. “Our survey found that, while 95% of organisations have developed ESG propositions, only 10% have made significant progress towards their goals.
“Executives named inadequate data as the greatest obstacle – even more of a hurdle than regulatory barriers and inconsistent standards.”
Jonathan Wright, global managing partner for sustainability services and global business transformation at IBM Consulting, said: “Data is the lifeblood of ESG. Now is the time for enterprises to put information in the hands of operators who can make informed business decisions that improve their ESG impact daily.”
A total of 2,500 business leaders and 20,000 consumers from 34 countries took part in the study, which sought to shine a light on their attitudes and approach to tackling ESG-related issues.
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Of the UK executives who participated in the poll, inadequate data and inconsistent standards were cited by 42% of respondents as being the biggest obstacle to making progress towards their ESG goals, followed by inadequate skills (37%) and regulatory challenges (34%).
“Without the ability to access, analyse and understand ESG data, companies struggle to deliver greater transparency to the consumer – a key stakeholder – and meet consumer expectations,” the company said.
The UK part of the study also revealed that 67% of executives consider ESG initiatives to be a central pillar of their overall business strategy, and a further 66% said they consider ESG to be a revenue generator rather than a cost to the business.
Meanwhile, the consumer side of the poll revealed more than half of respondents said environmental sustainability (57%) and social responsibility (51%) are very or extremely important to them, but the cost-of-living crisis has made making environmentally sustainable decisions more difficult in the past 12 months.
Even so, Wright said it is vital that business leaders tap into the fact that consumer buying habits are increasingly being influenced by ESG factors.
“Consumer commitment to environmental sustainability and social responsibility has intensified with consumers voting with their wallets,” he said. “As a majority of consumers prefer to buy from and work for ESG leaders, businesses must prioritise transparency and break down barriers to ESG data.”