Sep 01, 2021

Companies risk of losing business if they fail to act on ESG

Sustainability
ESG
COP26
ESGBusiness
Helen Adams
3 min
ESG
99% of businesses commit to environmental improvements before COP26, BDO survey reveals, to safeguard future business interests

Almost one third of mid-market businesses say they face a high risk of losing business if they fail to act on environmental, social or governance policies, according to a new survey from accountancy and business advisory firm BDO.

When asked to think ahead to the next five years:

  • 24% of respondents said there was a ‘high’ risk of losing business - or eligibility to bid for new business - if they failed to meet acceptable ESG standards
  • 7% said there was a ‘very high’ risk 
  • 36% said the risk was ‘low’ 
  • 6% judged there was no risk at all.

 

ESG considerations becoming more important for businesses

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions. The company is headquartered in London and has a revenue of $10.3bn.

The results are taken from a Censuswide survey carried out for BDO among more than 500 middle market businesses with turnovers of between £10m - £300m per annum. 

The C-suite respondents included representatives from:

  • Retail and Wholesale
  • Real Estate and Construction
  • Manufacturing
  • Technology & Media
  • Natural Resources
  • Hospitality & Leisure
  • Shipping & Transport
  • Financial Services
  • Professional Services and Other sectors.

 

The new figures suggest that ESG considerations are moving up the agenda for mid-market businesses.

When asked about their top business priorities, 38% of business leaders ranked meeting ESG criteria as their highest priority. 

This was higher than those citing adapting to post-Brexit challenges, 36%, and recovery from COVID-19 25%.

With the start of COP26 just weeks away, many mid-market companies appear to be particularly focused on improving their environmental performance.

When asked about new environmental commitments made in the last 12 months:

  • 32% said they had ringfenced budget for green initiatives 
  • 28% said they had set carbon reduction targets for the next 3-5 years
  • 26% said they had introduced measurable policies to reduce their carbon footprint 
  • 25% said they had pledged to become net zero or carbon neutral.
  • Fewer than 1% of respondents said they had not planned any environmental measures at all.

 

ESG is on the agenda of institutions at every size 

The COP26 summit will take place at the end of October in Glasgow, Scotland. It aims to increase action towards the Paris Agreement goals and the UN Framework Convention on Climate Change.

Across the world, businesses want to show customers, employees and stakeholders that they are playing their part in the fight against climate change as well as supporting a diverse range of employees.

“While the pressure to improve ESG performance has to date focused on the large polluters, big financial institutions and publicly listed companies, we are now seeing a trickle-down effect with ESG now firmly on the board agenda at mid-market level”, said Matthew White, BDO Senior Partner and Chair of the firm’s ESG Executive Committee. “This reflects a growing awareness and acceptance among many mid-market business leaders of the responsibilities they have to their employees, to stakeholders and to wider society. Many are also waking up to the reality that failing to take ESG seriously could have serious commercial consequences. With COP26 just around the corner, the world’s attention will focus on efforts to limit the global temperature rise to below 1.5˚C. In this context, it is encouraging to see so many mid-market firms taking action to reduce their environmental impact, but globally emissions will need to be halved over the next decade so there is still much more to do.”

 

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