ESG is becoming increasingly compliance driven. This conclusion is drawn by ESG consultancy Empact based on research among nearly 100 medium and large companies from the Netherlands and Germany. The survey also shows that there is an increasingly strong integration of ESG within corporate strategy, but that implementation lags behind. ESG is not yet a way to realize value creation for companies.
The next step is to move from compliance to a truly strategic ESG approach. According to lead researcher Teresa Brose, “We see that due to new and upcoming legislation like the CSRD and the CSDDD, there is a lot of focus on ESG-Compliance. The coming years are therefore dominated by its implementation. Our expectation is that the companies that start using ESG strategically will also become the best performing companies. We see that at the same time that this is precisely where the challenge for business lies.”
Together with compliance-driven ESG risk management, companies that deal strategically with ESG are also going to translate this into fairer and more sustainable products and business models. Only then can companies start turning their ESG risks, into opportunities.
The 5 key findings from the study:
- Companies’ focus is on achieving ESG compliance;
- Supply chain is the weakest link in companies’ overall ESG performance;
- Perceived pressure from internal and external stakeholders to design ESG-focused products and business models is already high, as is corporate awareness in this area;
- However, companies must be careful not to fall into the trap of (unintentional) greenwashing, as the study shows that companies use ESG as a selling point, but their performance often does not match their marketing message.
- The survey shows that measuring ESG objectively is still a major challenge.
Download the full report here.
