EY, Capgemini & InfluenceMap: How to Close the 'Say-Do Gap'

There is an endemic problem in the world of corporate sustainability known as the say-do gap. 

This is the disparity between the sustainable commitments companies make and the actions they take.

These days, the vast majority of large corporations are required to create robust sustainability policies and report against their progress.

The universal consensus is that companies must achieve net zero by 2050 at the very latest if we are to mitigate the destructive effects of climate change, so it is incumbent on those organisations to express their commitment to meeting this deadline.

But several studies and investigations have found that many companies are actively pushing against the government regulations to which they have assented.

"Corporations are working hard to undermine regulation," says Clover Hogan, Climate Activist and Founder of Force of Nature, a non-profit organisation that mobilises environmentalism among young people.

"Just last year it was uncovered that 58% of major corporations have put forward climate commitments in opposition to their own lobbying."

This shocking statistic comes from a report by InfluenceMap which surveyed the sustainability of 293 of the Forbes 2000 companies in 2023.

"The only climate solutions that corporations truly support are those that either make them money or let them continue with business as usual," Clover continues.

So, what can be done to close the say-do gap, and how can we be sure companies and investors will deliver on their sustainability targets?

The EY 2024 Institutional Investor Survey

A new report from globally renowned professional services firm EY highlights similar issues to those raised by InfluenceMap in 2023, although it contains a special focus on investor behaviour.

The EY report, which surveyed 350 investment decision makers from around the world, makes a connection between the sustainability of companies and the wishes of their investors

It finds that 88% of respondents confirm their institutions have increased the use of ESG information in decision-making over the past year.

However, a staggering 92% worry that ESG initiatives could harm short-term financial performance.

These conflicting sentiments mirror a broader tension: the balancing act between sustainable ambitions and immediate economic pressures.

Now, this is not the first report to identify this trend among investors, with some investors in other reports going so far as to say ESG represented little more than "woke" virtue signalling, a notion which belittles the climate action imperative companies and investors share.

The EY report does not find investors to be quite as combative, but it identifies many of the same sentiments.

While 78% of institutional investors surveyed say companies should prioritise ESG investments — even at the cost of short-term profits — 53% of corporate executives say they are facing pressure from these very investors to deliver quarterly earnings at the expense of long-term sustainability efforts.

Promises versus policies

The aforementioned InfluenceMap report spotlights some extremely concerning double standards in big business.

It references Chevron’s pledge to reach net zero by 2050 while opposing stricter vehicle emissions standards in the US.

Similarly, Nippon Steel’s carbon neutrality goal is undercut by its lobbying against carbon taxes in Japan.

Will Aitchison, the lead author of the study, encapsulates the issue succinctly: “Unless companies match their climate commitments with ambitious support for government-led policy action, the Paris Agreement goals will be impossible to reach.”

Being found guilty of hypocrisy is embarrassing for companies like these and it damages their reputations amongst consumers, who are more conscientious than ever before.

Statistics from Capgemini research show that, while many companies are trying to decarbonise transparently, a whopping 52% of consumers believe that organisations are greenwashing their initiatives, which is up from 33% in 2023.

This increase suggests that consumers are growing sceptical and cynical about the sustainability efforts of corporations, which will only worsen if companies continually act against their word.

“Businesses that lobby against climate action undermine not only their credibility but also global progress toward achieving net zero,” says Catherine McKenna, Chair of the UN’s High-Level Expert Group on Net Zero Commitments.

How to improve corporate accountability

To narrow the say-do gap, both investors and companies are going to have to confront uncomfortable truths.

For companies, this means going beyond platitudes and embracing genuine transparency.

Gill Lofts, EY’s UK Sustainability Leader, calls for greater transparency: "Publishing a clear, actionable transition plan is non-negotiable in today’s environment.

"Investors should demand this level of detail — and vote with their capital when companies fall short."

For their part, investors need to apply consistent pressure to companies while aligning their own practices with sustainability principles.

Of course, it is all well and good to say that stakeholders need to do better, but as all the research in this article shows, that does not always happen.

Firm regulation from independent governing bodies, streamlined reporting processes and penalties on passing pollution thresholds are all touted as ways to ensure corporate players toe the line.

Whatever the strategy, it is obvious that action is required.

The EY report concludes with a call to action for investors and companies alike.

It says that companies should view the risks and opportunities that climate change presents as "an integral part of their investment strategy rather than a niche application to a subset of mandates".

"Through this approach, they should be able to succeed in balancing short-term demands with long-term value and close the say-do gap."

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