An inaugural 10-country global research study of public attitudes to ESG (Environmental, Social and Governance) principles for governments and corporates has found that environment, especially climate change, dominates people’s concerns.
More than half of consumers say they are willing to boycott companies with poor ESG performance and believe ESG claims should be regulated with penalties imposed for poor practice.
The SEC Newgate ESG Monitor surveying more than 10,000 people in Europe, the Americas and Asia-Pacific found that in all 10 countries, climate change or the environment was the number one ESG concern.
It also identified environmental issues including action on climate change and carbon neutrality as being the most powerful factors in determining public perceptions of governments’ and corporates’ ESG performance. The countries surveyed were: Australia, China, Colombia, France, Germany, Italy, Japan, Singapore, the UK and the U.S.A.
The SEC Newgate ESG Monitor found that people were strongly interested in ESG, with six in 10 rating their interest in ESG issues as high. Other key findings include strong public demand for consistent and measurable ESG reporting, significant levels of social media and buyer’s choice activism in response to poor ESG performance, and demand for all organisations to take responsibility for issues such as their supply chains and contribution to local communities.
SEC Newgate CEO and founder Fiorenzo Tagliabue said: “Strong and growing community focus on ESG matters represents a fundamental challenge for corporates and governments everywhere.
SEC Newgate works at the nexus of business, politics, communities and markets and we’re witnessing a sharp increase in demand for strategic advice and advocacy on ESG – the policies and behaviour relating to ESG issues and how business and government can protect and enhance their reputation in this critical space.
It’s s why we’re launching the SEC Newgate ESG Monitor, our first global thought leadership initiative, at a global debate on October 21.”
Among ESG issues, the environment worries people most, with 24% mentioning climate change unprompted and 10% citing environmental issues in general.
This reflects the prominence of climate change in the global debate ahead of the UN Climate Change Conference (COP26) in Glasgow from 31 October. Other top environmental issues were waste management (8%), pollution (6%) and clean air (5%).
SEC Newgate Deputy CEO EMEA Tom Parker said: “Despite unique local issues, the SEC Newgate ESG Monitor revealed a surprising degree of common ground globally.
There is a widespread interest in and concern about the ethical and sustainability performance of governments and corporates. This is a truly worldwide phenomenon. The surprising consistency in these results illustrates that all local issues are global and that global issues are local.”
Sectors such as healthcare and technology came out well globally, while chemicals, technology and airlines were seen as weaker on ESG performance.
Sue Vercoe, Managing Director, Social & Market Research, SEC Newgate, whose team conducted the survey, said: “This is the first time we have undertaken a public perceptions study of this kind stretching across multiple countries.
What is interesting is how much we learned about the community’s differing expectations towards government and corporates using regression modelling to pinpoint the specific factors that most impact ESG perceptions.
There are some clear signals in this research that the public expects government to lead on issues such as the global response to climate change while expecting companies to demonstrate clear evidence that they practice what they preach.
“The global focus on ESG is being driven by individuals and consumers and their perceptions are informing their behaviour and what actions will be most effective for business and government.”
The SEC Newgate ESG Monitor will be an annual benchmarking index to measure global sentiment, so countries can track their performance year on year as well as compare their ranking with peer countries around the world.
SEC Newgate 2021 Global ESG Monitor Report: Key Findings
Key findings include:
- More than half of people worldwide (51%) said ESG performance influences their purchasing decisions, rating its influence as 7 or more on a scale of 0 to 10 where 0 means it is ‘not at all important’ and 10 means it is ‘extremely important’. In addition, over the last two years 32% had warned others against using a company because of its behaviour and 26% had discussed a company’s behaviour online or on social media.
- The public is actively looking for quality information to help guide their knowledge of how governments and corporates are performing on ESG. Some 74% in all countries want to see consistent ESG performance measurement frameworks put in place that enable scrutiny and comparison. Also, 71% want more regulation on claims made by companies about their ESG performance. Among the other priorities people identified:
- Companies doing more to promote their ESG efforts to consumers and investors (74%)
- Seeing more evidence of companies giving back to their communities (73%)
- Companies improving processes to stop unethical practices (72%)
- Penalties for poor ESG practices (69%)
- Ethical supply chains have emerged as a key issue for both companies and governments when people evaluate ESG. It is rated globally as the top issue for companies to address (78%), followed by looking after their employees (77%) and giving back to the natural environment (76%).
- Overall, people tended to give corporates a little more credit than governments for addressing ESG issues, rating companies 5.7 out of 10 versus 5.5 for governments on a scale of 0 to 10 where 0 means ‘very poor’ and 10 means ‘excellent’. Both were seen as performing better on social issues than environment or governance, although companies are outperforming governments on governance.
- Driver analysis using regression modelling has isolated the most important areas for governments and corporates to focus on if they want to improve public perception of their ESG performance:
- For governments, action in governance will make the make the most difference. The factors that have the most impact in driving their ESG rating were their ‘goals and ambitions for improving the environment’, ‘action on climate change’, ‘behaving ethically and doing the right thing’ and ‘being transparent in decision making’. In this last area, governments are seen as lagging which makes it a key area to target.
- For corporates, action on environmental issues will make the most difference in shifting opinion. The factors having the biggest issues on ESG ratings were ‘responsible and sustainable use of natural resources’ and ‘genuinely working towards being carbon neutral’ – currently companies are not well regarded on either measure.
- Modelling also shows that globally, banking and finance is the sector people are thinking of most when they rate companies in general for ESG performance, accounting for 19% of importance. Energy and utilities (11%), manufacturing (10%) and chemicals (9%) also featured prominently in people’s thinking.
- Unprompted perceptions about who is doing well among companies appear to be influenced by people’s awareness of retailers with prominent ESG messages. Those who generally scored well were large supermarket chains and technology companies.
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