Consumers Believe ESG Should Be a Mandatory Practice but Remain Sceptical of Why Businesses Engage
Research by digital identity specialists ID Crypt Global, has found that while the majority of consumers believe that Environmental, Social and Corporate Governance (ESG) should be a mandatory practice for UK businesses, less than a third (32%) believe it is undertaken to make a positive change, with companies focussing on ESG of business gain alone.
Environmental, Social, and Corporate Governance (ESG) is a set of standards designed to measure a business’s impact on society and the environment and how transparent and accountable it is.
The survey of UK consumers, commissioned by ID Crypt Global, found that 91% believe that it’s important companies commit to improving their practices concerning ESG.
Moreover, 75% would like to see it become mandatory that all companies are issued with an ESG score. However, 22% believe they should pay to obtain an ESG score, with 79% stating that ESG scores should be based on one singular methodology and provided by one company to ensure consistency and transparency.
Existing research shows how companies focussing on ESG over the last three years are seeing sales increase at twice the rate of those who have not. Furthermore, profits for enthusiastic ESG adopters have grown three times the rate of everyone else, while employee headcounts have grown twice as quickly as those who aren’t prioritising ESG.
It’s clear that ESG brings a benefit, which is no different regarding consumer perception. ID Crypt Global found that 78% would be more likely to engage with a company with a high ESG score versus one without, with the same percentage also more likely to recommend a company with a higher ESG score.
When asked which area of ESG they believed was most important, 69% of consumers ranked all aspects equally, while the environmental impact was the most important individual aspect of ESG for 17%.
However, while consumers may buy into ESG, just 37% would research a company’s ESG activities beyond their score. In comparison, just 32% believe that companies undertake ESG to make a genuine positive change, with 685 believing it is done for business gain.
CEO and founder of ID Crypt Global, Lauren Wilson-Smith, commented: “ESG has the potential to change the world of business and it’s clear that consumers resonate more with a company that is conscious about how they impact the world we live in.”
“However, they remain largely sceptical as to the true motives behind ESG practices, and they are right to do so, as unfortunately, its primary use is to identify the risks and opportunities that will affect a business and its profit margins.”
“It’s clear that more needs to be done to improve the practice of ESG. The starting point is to improve scoring consistency, boost availability to businesses of all sizes and lower the cost of engaging in ESG.”