Businesses expect era of ESG 'public scrutiny' post-Covid
According to a new report from FTI Consulting, socio-economic fault lines have been exposed by COVID-19, creating “an unforgiving marketplace” for businesses who are now under increased scrutiny from governments and the public, in three key areas:
- Business conduct and treatment of customers
- Sustainability and ESG practices
- Relationship with public bodies or procurement of government contracts
The survey questioned more than 2,800 executives from large public and private companies.
The business advisory firm FTI Consulting is headquartered in Washington DC and has a revenue of $2.3bn.
Improving ESG and sustainability practices is of extreme importance
The FTI Consulting 2021 Resilience Barometer report found that UK companies were under “extreme” pressure to modernise over the next 12 months, in areas such as:
- Integrating technology
- Strengthening reputations
- Improving ESG and sustainability practices
- Improving corporate culture
- 74% said they believed that their business model needed to fundamentally change to maintain or restore competitiveness.
- 79% of UK organisations said they were either being investigated or expected to be investigated in the next 12 months.
- 95% of companies said they were actively investing in preparation for future crises, including using tools such as AI and analytics to mitigate risk.
“The ability of businesses to handle crises has been a defining factor of their success during the pandemic,” said Caroline Das-Monfrais, a Senior Managing Director and Global Resilience Lead at FTI Consulting. “However, COVID-19 has exposed and exacerbated economic and social fault lines — employee wellbeing, talent shortages, treatment of customers, financial crime and cybersecurity all have risen up the corporate agenda, and businesses are responding to protect value and build resilience as they look towards future growth.”
“The ever-changing landscape will put the onus on companies to take a proactive stance regarding investigations,” said Edward Westerman, Global Investigations Initiative Leader at FTI Consulting. “Leveraging new technologies and data and analytics can help companies efficiently manage an ongoing investigation and help mitigate the risk of future crises."
The Resilience Barometer identifies the nature, severity and potential trajectory of these threats, which are forcing companies to embed resilience on more fronts:
Growing cybersecurity threats
75% of companies surveyed suffered a cyber attack in the past 12 months, with a rise in phishing attacks among the most prevalent type 31%.
Breaches are increasingly damaging, with 25% experiencing a loss of customer/patient data, and a further 23% reporting a loss of third-party information.
Class actions and mass consumer claims
13% of respondents experienced these in the past 12 months, and 12% expect this to continue in the next 12 months.
27% strongly agreed that class actions or mass claims are becoming more costly for their business, with 17% of legal costs expected to be spent on settlements from class actions and other disputes.
The “Great Resignation”
Over the last 12 months, 28% of companies surveyed have experienced a shortage of talent and skills, and 72% have reported increased mental health issues in their workforce since the start of the pandemic.
Unsurprisingly, 31% are under “extreme” pressure to retain talent, and 25% are under “extreme” pressure to improve corporate culture in the next 12 months.