Are corporations making good on their ESG efforts? Not according to a recent Google Cloud corporate survey.
The survey, conducted by The Harris Poll and sponsored by Google Cloud, found that Environmental, Social, and Governance (ESG) efforts have fallen from the top organizational priority in 2022 to third place in 2023.
“In today’s rapidly changing business landscape, executives are increasingly realizing the importance of sustainability for their organizations. However, navigating economic
headwinds while maintaining sustainable practices is proving difficult,” reads the report.
The shift in priority is attributed to the macroeconomic environment and pressure from external parties to cut corners on sustainability initiatives in order to prioritize client relationships and revenue. According to the survey’s findings, 78 percent of executives say they are being forced to achieve sustainability results on less money than before. Forty-five percent say the current economic climate is “regressing sustainability efforts,” with regional impacts like the energy crisis in Europe negatively affecting progress.
“Facing these challenges, the number of new sustainability programs moving into
implementation phases was down 8 percent from 2022,” the report notes.
The research shows that many executives are grappling with the complex behind-the-scenes logistics of who makes sustainability-related decisions within their company. The majority of executives, 84 percent, believe their sustainability initiatives would be more effective if they had better structure with clear accountability.
To help advance sustainability efforts, executives believe that having a dedicated leader who would govern sustainability initiatives is the number one action. Coupled with strong leadership, 83 percent of respondents believe that agile team structures will help them achieve their goals.
Enthusiasm was highest among Gen Z respondents, with one hundred percent saying they would be willing to tie compensation to sustainability targets.
Ninety-one percent said there should be harsher consequences for overstating sustainability efforts, and 90 percent said they feel empowered to make changes that evolve their organization’s climate posture.
C suite respondents across the board said that with better measurement, clear decision-making, and some creativity, companies can better position themselves to progress on their sustainability and business goals, the survey notes.
Seventy-two percent of respondents agreed that while everyone says they want to advance sustainability efforts, “no one knows how to actually do it.” This shows the willingness to progress but also the need for better measurement and management tools.
Measurement is critical in driving progress, especially as many executives admit to overstating or inaccurately representing their sustainability activities.
This behavior is accidental, according to 59 percent of executives, and underscores the need for accurate measurement tools to track progress. The survey shows that 87 percent of respondents are looking to incorporate better measurement into their organizations to help make more accurate targets.
Despite the challenges faced, there is reason to be optimistic that organizations will continue to prioritize sustainability.
Almost all companies (96 percent) have at least one program in place to advance their sustainability initiatives, and participation in programs remains mostly unchanged from 2022 Interest in organizational sustainability has increased, with 84 percent of respondents saying they care more about sustainability than before.
With recent warnings from the IPCC over climate change’s impact, sustainability metrics are a critical corporate issue.
But the inability to execute sustainability initiatives threatens to compound previous risks unless executives take the appropriate steps. These include greater accountability, better measurement and management, and well-defined leadership.
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