- Number 1 reason for implementing ESG policies: to drive brand awareness and influence customer purchasing.
- Number 2 reason: to be a better and more responsible business.
- Number 3 reason: to better compete in the war for talent.
- Number 4 reason: to boost sales and profits.
- Less than 1 in 5 (17%) of businesses had an ESG policy in place pre-pandemic.
- 49% of all businesses with an ESG policy implemented it within the last six months.
- 28% plan to become a Certified B Corporation within 12 months.
Businesses are more likely to implement so-called green or ‘ESG’ policies to look good rather than to save the planet, a new survey conducted by…errr… us.
More than half (52%) of UK businesses polled (who said they wanted to become a gold standard green company – or Certified B Corporation) admitted that the number one reason for bringing in such Environmental Social and Governance policies would be to impress their customers.
As well as the confession that improving public perception of their brand came ahead of showing their commitment to people and planet (45%), just under a third (28%) admitted they would only adopt ESG measures to raise their profile as an employer of choice while one in five (22%) said they would do it just to drive profits and sales.
The survey into business attitudes towards ESG policies and Certified B Corporation status (the global accreditation for businesses who have met the highest standards in sustainability and social performance) involved 811 C-suite executives and senior management teams across the UK and was conducted between 25th-29th April. Respondents were asked what they considered their business’ impact on the environment and their social impact and responsibilities to be.
The research found there was a meteoric rise in the number of companies adopting ESG policies since the Pandemic started. Less than 1 in 5 (17%) said they had any in place in March 2020 while nearly half (49%) of the businesses adopting ESG measures say they have only rolled them out in the last six months and an additional third (34%) did so between April 2020 and April 2021.
1 in 2 UK businesses with an ESG policy in place implemented it in the six months to April 2022 – are they guilty of using sustainability to drive business recovery and growth? Probably!
Nearly a third of the businesses surveyed (28%) also said they planned to become a Certified B Corporation within the next 12 months.
Paul MacKenzie-Cummins, Founder and Managing Director at Bath-based Clearly, itself a Certified B Corporation, commented:
“Our findings have confirmed the suspicions we have long held: the hype around ESG and gaining B Corporation accreditation has little to do with a genuine desire to be a better business that balances profit with the need for positive environmental and social impact.
“Rather, it is performative behaviour that has resulted in a tsunami of businesses viewing ESG as a catalyst for post-pandemic growth.”
The poll also found that more than a third (35 per cent) of businesses simply pay lip service only to the wider impact of their policies, admitting they do not financially gift anything at all to environmental or social impact initiatives.
And, of the 65 per cent that do, half (49 per cent) revealed they only gift a tiny proportion of their profits – on average of one per cent of their net profit, whereas 1 in 6 (16 per cent) are more generous and gift a percentage of their net income to such causes.
Paul MacKenzie-Cummins added:
“There is a plethora of research from the last two years that shows how green- and purpose-led businesses outperform the market. Many more studies have demonstrated how customer purchasing decisions are increasingly shaped by what a business says and does.
Net profit gifting vs. net income gifting: the former is tokenistic, the latter shows commitment
“However, what we are seeing here is a lot of smoke and mirrors and very little, if any, real commitment among the majority of businesses that claim to be green- and purpose-led through their ESG communications.”
To illustrate the point, consider the following examples:
Example 1: gifting using net profit
- If a business has annual net revenues of £1 million and a net profit of 10 per cent (£100,000), one per cent of that net profit equates to £1,000 per annum for ESG initiatives. Or £19 a week.
Example 2: gifting using net income
- If the same business as above opts instead to gift from net income instead of net profit, that £1,000 figure is multiplied ten-fold to £10,000 that can be gifted to the same causes. Or £190 per week.
“Gifting a percentage of net profit is little more than tokenism and to describe it as a genuine commitment to people and planet would be extremely weak at best,” said Paul.
“Far too many businesses are jumping on the green and purpose bandwagon and using ESG comms in a bid to seduce customers into thinking they are an ethical organisation that supports good causes.
“Moreover, they are doing so to build brand equity, drive sales, and boost profits. It is baseless, bollocks, and putting the business itself at serious reputational risk.”
“Customers are increasingly holding businesses to account, and those organisations found guilty of green- or purpose-washing will struggle to win back the trust and loyalty of those who matter the most to them.”
“Using the sustainability and societal change to build brand equity, drive sales, and boost profits is baseless, bollocks, and brand suicide” – Paul MacKenzie-Cummins
MacKenzie-Cummins warned we would now see “an even sharper rise in businesses boasting of the ESG credentials” in the coming months but warned:
“This will be matched by an even stronger demand among stakeholders for greater transparency in the form of Responsible and Impact Reporting coupled with watertight ESG communications. There will be no hiding from this, consumer and client demand will necessitate it.”
If your business has something to say, let us communicate it clearly for you. Email Paul directly at: email@example.com