Consumers believe ESG should now be mandatory

Environment, Social and Governance – ESG – are central to 21st Century business models. A measure of an organisation’s impact on people and planet, the public now want clarity to help with purchasing decisions. 

To quote some top line figures from a new UK consumer survey, 91% of the country now believes it is important for companies to improve ESG practices. 75% would like to see practices of this kind become mandatory, so organisations would automatically receive a score. 

There’s a strong business case for this, too. 78% of respondents say they are more likely to engage with companies with a high ESG score, compared with those ranking lower. Further to this, just 32% agree that firms want to improve impact for the good of society and the environment, with most seeing this as a means to draw in more customers. Proof of concept, no less. 

The research, conducted by ID Crypt Global, also unveiled interesting truths about the lack of clarity around ESG. For one thing, the majority say a relevant score should be available for free, rather than on a paid-for basis – and 79% back a single universal methodology to make it easy to gauge corporate responsibility.

There’s also a shortfall in the number of people willing to actively investigate ESG records. Only 37% would look into an organisation’s work in this area beyond the score itself, highlighting the importance of understanding what that score actually means. 

‘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,’ said Lauren Wilson-Smith, CEO and Founder of ID Crypt Global, a digital identity specialist. 

‘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,’ she continued. ‘It’s clear that more needs to be done to improve the practice of ESG and the starting point is to improve consistency of scoring, boost availability to businesses of all sizes and lower the cost of engaging in ESG.’

Earlier this month, Environment Journal reported companies actively practicing and reporting ESG enjoying greater profit growth annually than those that do not. Find out more here.

Image: Self Taught