Environmental, Social and Corporate Governance – what our customers have said

ESG – Environmental, Social, and Corporate Governance (ESG) is a topic that’s fast becoming an essential part of business practices. Building pressures from not only customers but employees, investors, and governments alike, are making ESG commitments almost unavoidable for modern businesses.

Over the past few weeks, Market Dojo has carried out research amongst our users to establish how ESG is currently perceived in terms of importance, which department is typically held accountable, how data is being collected and which key challenges are being felt.

Is ESG on people’s agenda?

When we asked whether ESG is part of their company’s agenda, 100% of respondents stated ‘Yes’. Given the recent surge in conversations and in turn, business focus on ESG activities and data tracking, it’s not surprising that 100% of the individuals surveyed stated that ESG was on their company’s agenda in some way. 

Is ESG on your company’s agenda?

The importance and prioritisation of ESG

When asked, how would you rate your company’s view on the importance of ESG, 69% stated it was very important and 31% stated it was important. Similarly, when asked how would you rate your company’s prioritisation of ESG, 13% stated ‘medium priority’, 31% stated ‘high priority’ and 56% stated ‘very high priority’.

The responses to these questions were very much as expected, with participants’ indicating that ESG was considered to sit at the ‘important’ and ‘high priority’ end of the scales. 

Whose responsibility is ESG?

The answers to this question came in many different forms. In order to reduce the number of unique departments, we’ve bundled together similar responses (eg. sustainability team, sustainability department and sustainable development department), giving them a more generic department name. We have provided the shortened list below. The most common answers for this question were a dedicated sustainability team, followed by the procurement department.

• Sustainability
• Procurement
• Logistics
• Purchasing
• ESG
• SHERQ
• Health & Safety
• HR
• Finance
• Operations
• Quality
• Everyone
  

What are people looking to achieve with ESG?

When asked about their ESG goals, the respondents gave a range of responses, though numerous key themes arose from the findings. We’ve combined similar responses to give an overarching view of the typical goals businesses are working towards which are listed below.

• Improve collection and reporting of ESG activities/data within the supply chain.
• Significant reduction of (or ‘net zero’) carbon emissions across the business by x date.
• Source more sustainable suppliers.
• Reduce inequality to combat injustice.
• Position social compliance as a key use case.
• Incorporate all aspects of compliance.
• Educate and instill a culture of 100% environmentally conscious decisions, both internally and in the local community.
• Install green initiatives to reduce environmental impact.
• Support and donate to charities.
• Work to improve ESG-related certifications.

These responses were very much aligned with our expectations and echo the conversations we’ve had with both clients and prospects when it comes to their ESG ambitions.

Where are businesses on their ESG journey and how are they collecting/storing data?

In terms of which stages respondents are at in their ESG journey, interestingly the answers were very split with 56% stating they were between ‘planning’ and ‘early stages’, whilst 44% stated they were between ‘well on their way’ and ‘well established’. Therefore the responses to this question are marginally weighted towards the earlier stages of the ESG journey, which is as we would have predicted. It was however surprising to us that so many respondents felt they were running successfully, it’d certainly be interesting to see what these processes look like and where any gaps might be.

Where are you on the ESG journey?

A surprising result in this answer set when questions how ESG data was being collected and stored, with 53% using emails & spreadsheets, 27% using data collection tools, and 13% still printing and filing. Considering the high number of respondents who felt they were running their ESG activities successfully, we found this interesting. That is not to say that it is impossible to carry out these activities to a good standard using emails and spreadsheets, however, it requires a very high level of attention and rigorous processes in order to work effectively. With tools available on the market that can provide a central repository for important documents, and compliance certificates with expiry reminders for documents that need renewing, it further highlights the risks that are present when using spreadsheets. 

How are you collecting and storing your ESG data?

Key challenges

As with some of the previous responses, we’ve collated similar answers to give a view of the typical challenges the responding businesses are facing. By far the most common challenges were around data collection and the management of information.

• Collecting information efficiently
• Management of information. No central ESG database to put all ESG-related matters together. 
• Getting buy-in from the supply chain.
• Managing a culture shift and collaborative behaviour internally.
• Management of ESG goals and time to dedicate.
• A knowledge gap.
• ESG data is actioned and reported in several areas of the business and all are doing their own thing. 
• Employability.

These challenges again are very much aligned with our expectations. The pain points our clients and prospects most often discuss with us tend to be around centralisation of data and reporting.

The importance of ESG data collection

Another qualitative answer set with numerous responses. As with previous questions of this type, we have accumulated comparable answers.

• Stakeholders and customers require ESG to win contracts. It’s a mandatory requirement to have sustainability embedded. The impact we can have as businesses and the importance to our communities, stakeholders, and shareholders.
• Lots of pressures coming from clients and investors, as well as new regulations coming into place. It’s also important for employee retention and engagement.
• Sustainable practice is the only option if longevity is the preference. Both commercially and existentially.
• Businesses are under a lot more pressure to look after the workforce within their supply chain. Rightly so, there’s a huge amount of pressure to carry out business practices ethically and safely.
• Corporate Social Responsibility is a vehicle for employer branding. It promotes pride in belonging. The approach also contributes to the improvement of working conditions. Integrating the principles of social responsibility at the centre of the company’s strategy and practices is, therefore, a guarantee of sustainability.

The key takeaway from the results of this survey is that ESG is certainly considered a vital aspect of running a business in the current market, with demands coming from all directions including employees, customers and investors. Many businesses are on the journey to improve their ESG data collection processes, and it’s an area taken into consideration across numerous departments, not just procurement. It’s clear from the responses that ESG isn’t going away any time soon and therefore it is an area that needs to be addressed. Though data collection and reporting of information appears to be a significant challenge.

Integrating ESG goals into your supply chain is no easy feat and depends highly on regular, robust communication between buyer and supplier, in order to acquire key data from your vendor base – gathering this information in a consistent manner and tracking it in a centralised platform, over mere emails and spreadsheets allows organisations to progress their ESG strategies, track goals, identify risks and protect their business’s reputation in what is a very fickle market.

For more information about how Market Dojo can help businesses collect their ESG data, check out the below video on SIM Dojo & ESG.

You can also register for Market Dojo’s 6 minute on-demand webinar “Integrate ESG goals into your supplier onboarding processes”.