ESG - Is the Central South mid-market doing enough?

Environmental, Social and Governance (ESG) issues are now never far from the headlines, or from the board table for that matter. However, businesses are at varying degrees of readiness when it comes to addressing the challenges, some recognising it as critical to future success, regulatory constraints forcing others to comply, while a number still lack the time or investment to properly focus on the issues.

Our bi-monthly Rethinking the Economy survey of 500 mid-market businesses, is helping us to understand where companies are on that journey and where further support might be required. Our latest data shows that for Central South businesses, reducing their environmental impact – for example, reducing emissions, making offices carbon neutral, curbing business travel – is the number one priority when it comes to ESG in 2023. The list of environmental, social and governance to-dos doesn’t end there, however. Nearly half of businesses in the region (44%) want to increase their 'social impact' (i.e. donating more money to charities, giving staff time off for volunteering, or getting involved in projects that support local communities); with 41% of Central South business leaders stating that they only want to work with businesses or suppliers whose values and credentials align with their own ESG strategy.

Worryingly, according to the Rethinking the Economy survey, 63% of respondents admitted that their company is only partially engaged in addressing ‘sustainability’ in the business – defined as development that meets the needs of the present without compromising the ability of future generations to meet their needs. Yes, more than a third of regional businesses say their company is fully engaged, but there is still a large proportion who are not.

There’s no doubt that ESG is an issue that requires the attention of the most senior people in a business. That’s why 75% of companies in the region admit that managing ESG-related risks and opportunities within their organisation is a job for C-suite members of the team, with more than half stating that it goes even higher to board and non-executive director level. As part of our Responsible Company series, we are talking to CEO’s and MD’s across the region who share their personal thoughts on how society defines a responsible business and what it needs to deliver and how.

While there’s still clearly work to be done in filtering the values and ESG proposition throughout businesses, other important steps are beginning to be taken by Central South companies in establishing best practice when it comes to ESG. Central to any efforts are clear goals and objectives, with the ability to measure and monitor these across each component of an ESG strategy. Everyone who was asked about whether they set, and measure ESG performance targets and indicators said yes. The response was overwhelming. But when you delve a little deeper into the statistics, there are some inconsistencies in where that focus lies. Only 13% of regional businesses monitor all areas of ESG. Unsurprisingly, 41% only look at the environmental aspects of ESG, while 13% focus on the social elements, and 22% look at the area of governance.

These figures need to improve, with companies building a more consistent approach across all elements of ESG performance. However, Central South businesses are not alone in this. Across every region of the UK, businesses are placing the environmental aspect of ESG at the centre of their measuring and monitoring efforts, suggesting this is where the majority of activity is focused.

A coherent strategy and implementation programme across all elements of ESG, driven by top management and with clear goals and measures, is now critical to a company’s short, medium and long-term success.