The Current State of ESG Maturity

Environmental, social, and governance (ESG) investing is one way asset managers and other types of investment organizations use their capital to improve the world. ESG efforts involve balancing businesses’ pursuit of greater profits with environmental sustainability and social concerns.

ServiceNow and ThoughtLab conducted a survey of company executives with ESG initiatives to help understand ESG’s current state and determine the leaders on the ESG maturity curve.

Manufacturing Takes the Lead

The survey responses spanned five executives across five sectors, namely telecom, healthcare, manufacturing, financial services, and the public sector. Although all five industries have made commendable efforts and showed progress, the manufacturing sector came out ahead in achieving their ESG goals.

Partly due to strong criticism of its carbon footprint, greenhouse gas emissions, and overall contributions to climate change, the manufacturing sector has been working harder than other sectors. The size of manufacturing firms also means they have greater resources at their disposal to devote to ESG efforts.

Shareholder Pressure to Do Better

Survey respondents noted feeling “medium to high pressure” to make meaningful, measurable progress on their ESG projects and benchmarks. ESG efforts are sometimes negatively framed as “do gooder” issues to make companies achieve better public opinion.

However, instead of feeling the pressure from the general public, as some politicians and naysayers assume, the pressure comes from employees and shareholders.

Where Pressure Pushes Executives Toward

Shareholder and employee pressure not only pushes ESG efforts forward, but also helps steer its course. Right now, there is a greater focus on the environmental component of ESG initiatives. This includes working towards goals like achieving net-zero carbon emissions and switching to green or renewable energy sources.

Addressing the social aspect of ESG is also receiving growing pressure, especially among employees. This includes instituting guidelines to treat employees equitably and generally improve workplace conditions to ensure a happier workforce. According to 64% of the surveyed executives, social-focused ESG efforts already pay off in helping them attract and retain talent, as well as improve their financial results.

What ESG Leaders Are Prioritizing

The survey also compared the efforts and priorities of companies that are ESG compared to companies that are behind the curve on ESG In general, ESG leaders are investing significantly more into ESG efforts and enforcing greater adherence to ESG regulations than non-leaders. They also show substantially better progress on reaching their sustainability goals.

Survey results show that 44% of leaders are making efforts to improve their firm’s health and safety standards, while only 20% of non-leaders do the same. Moreover, 39% of ESG leaders are working on making their facilities more energy efficient, while 37% already have zero-waste measures in place. These are compared to just 23% and 26% of non-leaders, respectively.

Aside from heeding pressure to meet environmental and social benchmarks, 77% of leaders on the ESG maturity curve are seen prioritizing investments in data security and privacy, versus 47% of non-leaders.

Overall C-Suite Confidence

Throughout the survey, the executives at ESG leaders generally expressed their confidence in the continued progress towards achieving the sustainability goals of their respective organizations. Many credit the adoption of new technologies, including artificial intelligence, both to gather data, monitor progress, and automate their processes.

Such technologies allow them to better track, measure, understand, and enhance their ESG efforts and progress. ESG initiatives in general are helping companies improve their standing both in consumers’ and employees’ eyes.

Overall, ESG investing is shown to pay off in several ways, including public perception, customer loyalty, workforce satisfaction and retainment, as well as efficiency and profitability.

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