A global survey conducted by Abu Dhabi Sustainability Week (ADSW), a leading summit for accelerating sustainable development and its host Masdar, reveals that 85 percent of organizations around the world consider COVID-19 as a wake-up call on sustainability.
The survey which focused on how businesses around the world are responding to Environmental, Social and Governance (ESG) in the wake of COVID-19, interviewed 525 executives from global businesses that deliver annual revenues of $250 million or more.
The global survey found that the pandemic is having a profound impact on businesses’ perceptions of ESG issues, with 87 percent of respondents stating that ESG performance is now one of their organization’s core strategic objectives.
The research found that many businesses anticipate that the pay-offs from strengthening ESG activities in their organization will accrue quickly. Nearly 65 percent of respondents expect to realize the financial benefit of ESG investment within the next two years, including 35 percent who expect it within the next 12 months.
“Fifteen years on since Masdar was formed, ESG has reached enough of a critical mass across all sectors that it is unlikely that we will see a return to the old profits-above-all models of the past. As we explored during Abu Dhabi Sustainability Week earlier this year, the opportunities presented by the Green Recovery will further fuel investor appetite for backing smart, sustainable companies. Those companies that ignore ESG will lose their relevance in the post-COVID era.”
Shareholders are a key driving force for ESG investment across sectors and regions with nearly half of all respondents (49 percent) stating that they are prioritizing ESG because it is important to investors.
Regional & sectoral insight
The survey also offers deep insights into how different geographical regions and industry sectors are responding to the demand for greater ESG commitments. About 70 percent of respondents from the Asia-Pacific region stated that their company is committed to achieving net-zone emission, while only 33 percent of participants agreed to it in the Middle East.
At a sectoral level, it was found that for some sectors balancing profit with sustainability is easier than others, with 68 percent of respondents from the technology industry having a balance between customer demands for sustainability with shareholder expectations for profits. However, in the transport sector, only 38 percent agreed to the same.
The ESG research was supported by a series of interviews with industry leaders, including Dietmar Siersdorfer, Managing Director of the Middle East and UAE at Siemens Energy, who said, “These issues need to be recognized not just as a showpiece of corporate strategy but as a fundamental necessity of doing business. As a company founded to drive the energy transition and promote ESG and sustainability values, Siemens Energy has set an ambitious target of net zero emissions by 2030. ”
More than half of the respondents (51 percent) intend to create new ESG-focused management positions in the next 12 months, with organizations based in Asia-Pacific and the Middle East & Africa leading the way in this area.
Sustainability was rising the corporate agenda even before the pandemic but this trend has accelerated dramatically during the crisis, improved ESG performance is now a core strategic objective for most organizations.
The ESG principles are shared by all stakeholder groups, including investors, employees, customers and suppliers. And those organizations that are rising to the challenge are already beginning to see returns.