Sustainability Ambitions Hard to Fulfil, Say Firms

21st November 2019

Logistics BusinessSustainability Ambitions Hard to Fulfil, Say Firms

Sustainability is now firmly on the agenda for management teams of businesses of all sizes, yet only a minority have a clear understanding of how they are performing or how Environmental, Social and Governance (ESG) metrics might apply to them.

These are among the findings of a new HSBC survey, ‘Navigator: Now, next and how,’ that explores the views of over 9,100 companies in 35 countries and territories. It shows that almost all businesses (96%) are feeling pressure to become more environmentally and ethically sustainable, but many are struggling with barriers such as their ability to finance change (35%) and to free up resources to implement that change (31%).

Over a quarter (27%) of businesses say they are frustrated by a lack of consistent ESG measurement criteria, meaning they aren’t sure what to focus on. Moreover, there’s a consistent gap of up to 10 percentage points between ESG indicators companies do identify as relevant and those they actually measure.

Barry O’Byrne, CEO of HSBC Global Commercial Banking, said: “People want to know the values of the businesses they buy from and market pressures mean every business must demonstrate it has a positive effect on the communities in which it operates. But translating sustainability ambitions into measurable practices isn’t easy. You don’t have to look far to find ESG guidance from organisations ranging from the UN to stock exchanges. Identifying which guidance might apply to your business is a challenge for management teams and our Navigator findings show that progress towards common reporting frameworks would clearly be welcomed.”

While 26% of businesses want to become more sustainable to improve their efficiency, and 23% think it will help boost sales, 15% are measuring their energy use and 8% their carbon emissions. In terms of social and governance metrics, 13% say they measure the fair treatment of employees and 14% track the effectiveness of their anti-bribery and corruption controls.

Pressure to do more on sustainability is coming from multiple sources including competitors, investors and employees, according to the survey. Businesses in Indonesia (47%), the UAE (46%), Australia (43%), Turkey (43%), South Africa (41%) and Singapore (40%) say they feel the most pressure from their governments, while peers in Argentina (49%), Russia (46%), Brazil (45%), Poland (45%), South Korea (44%) and Thailand (41%) say it’s their customers that are leading the call for change.

Over the next five years, a third of businesses expect to invest more in technology, innovation and infrastructure to improve sustainable production. The focus for 31% will be to promote employee health, well-being and safety, while for 29% it is to reduce waste generation and improve energy efficiency.