In a new white paper, we surveyed decision-makers in corporations' ESG and supply chain roles to see how ESG efforts at the corporate level are developing
As environmental, social & governance (ESG) initiatives become more commonplace, they also are becoming more critical to the way many companies and organizations operate. Yet, ESG brings with it a host of questions for corporate management to answer, such as how to manage and measure the company’s ESG initiatives or where within the organization the responsibility for ESG will sit.
And as ESG becomes a bigger regulatory issue, companies have to pay attention to not only what is happening within their walls, but whether their supply chain is in compliance with such critical issues as Scope 3 emissions.
With all of these concerns in mind, the Thomson Reuters Institute and Thomson Reuters Risk & Fraud Solutions group undertook a survey of decision-makers in ESG and supply chain roles at midsize and large companies across a variety of industries. The findings of this survey have been published in a new report, Building a Foundation for ESG: Defining, Developing, and Managing ESG Programs.
Interestingly, the report found that while ESG is widely embraced as a top priority at many public companies, with established programs and designated ESG leaders in place, many privately held companies are at an earlier stage of adoption with their efforts being more siloed into such departments as Supply Chain and Human Resources.
The report shows that companies have a current need for products and services that provide standardized, consolidated, and preferably automated ESG measurement and reporting.
Other trends and developments in the ESG area noted in the report include:
- Companies are finding it a challenge to collect and measure data amid problems of data quality and consistency — Both within and across companies, ESG leaders surveyed for the report expressed concern about the inconsistency in the quality of ESG data itself. Such confusion makes it more difficult to create and utilize benchmarks for measurement and performance assessment, respondents noted. Companies are also eager to adopt standardized ESG definitions, which some survey respondents also cited as a source of frustration. Overall, many respondents say they currently lack efficient and objective solutions for gathering required data, which is a problem that is likely to be exacerbated once the collection and reporting of additional data, such as Scope 3 information, becomes a requirement as well.
- Companies are experiencing a need for products & services that will help them measure and report ESG activities — Companies have a current need for products and services that provide standardized, consolidated, and preferably automated ESG measurement and reporting, according to the report. And this need will only grow as more ESG data needs to be collected and measured. Indeed, the report showed that there are clear opportunities for outside vendors to automate and standardize the processes involving ESG measurement. Looking forward, many respondents say a key challenge will be measuring environmental impacts that extend into their supply chains, with many saying they currently lack efficient and objective collection and measurement solutions to do this.
- Across the board, there is a widely held view among corporate leaders that ESG is here to stay — Despite all these concerns, survey respondents were strongly united behind the idea that ESG-related activities, along with the necessary collection and measurement of data, are now a permanent fixture of corporate life. As one respondent, a vice-president for legal affairs, told our survey team: “There’s a lot of public pressure that really makes it impossible for a public company not to have an ESG framework in place and to provide meaningful information.” Eventually, ESG will make the necessary in-roads into private companies as well, the report suggests, despite what appears to be stiff resistance. “ESG is very costly and time-consuming to undertake,” said one general counsel for a private company. “So, I think a lot of private companies struggle with the idea of doing it or not.”
As the report shows, ESG efforts at the corporate level are dynamically developing these days, and the transformation of ESG from a lofty ideal to a quantifiable set of data points and corporate initiatives continues to grow and become more commonplace.
You can download the full report, Building a Foundation for ESG: Defining, Developing, and Managing ESG Programs, here.