In a three month period in 2024, the management consulting company Roland Berger surveyed managers and employees at 158 international companies to see how ESG requirements are being implemented (more than a quarter of the respondent companies have revenues of under EUR 500 million, about 30% between EUR 500 million and EUR 5 billion). The study results were released on 28 October. (available at https://rolandberger.com)
As to the biggest challenges facing their company in the next 3–5 years, the leading concern for one-fourth of the companies is “managing inflation and price increases” (25%). The second biggest concern is “Meeting all ESG requirements and standards” (23%). These are followed by “Digitalization” and “Geopolitical risks”.
The industry sectors with highest ESG adoption are “Finance, banking, insurance, real estate industries” and “Industrial goods & services”. The sectors least adopting ESG are “Chemical”, “Pharma & healthcare” and “Retail”.
On ESG compliance, Berger says: “…more than 40% of companies across all sectors feel they are not yet performing well on the topic, and fewer than 8% think they are doing an excellent job of ESG compliance.”
The outlook is more positive when it comes to the ‘current performance on ESG’…7.6% rate their company’s current performance in mastering ESG requirements as “excellent” while majority 51.3% rate current performance as “good” (and 35.4% saying “decent”) while a small, 5.7% saying current performance to be “poor”.
More than half (54%) of companies already have a dedicated unit to manage ESG matters while in 28% a similar unit has been integrated on to an existing corporate function. Of all those companies that have a dedicated ESG unit, more than half say “customer engagement” as their main reason for doing so. Berger believes that these figures show “a forceful move toward formal and centralized ESG management.”
As to which operational functions/divisions could be given additional ESG responsibilities, “Procurement” is the most preferred (45%). “Production”, and “Engineering” fall among the lower functions.
When asked how ESG themes manifest themselves within their corporate culture, close to three quarters (72%) say it is from “strategy.” 27% say it’s through their “incentive system”. The higher bent towards “strategy”is good news for ESG since it shows leadership level engagement -rather than middle or lower levels- as the dominant way ESG is engaged by. In short, ESG is a “top level company work.”
As to what concrete behaviors set ESG leaders (“champion companies”) apart from other organizations, the huge majority 89% among ‘best in class’ companies say “a dedicated ESG organizational structure” (76% among the ‘rest of companies’). Without a dedicated ESG unit/division within the Company, it’s virtually impossible to be an ESG leader since reputable ESG performance is not a part time job.
