Firms struggle to turn green ambitions into action

Will Green is news editor of Supply Management
21 November 2019

A fifth of businesses see sustainability as “essential to their long-term survival”, according to a survey.

HSBC’s Navigator Report 2019 found 96% of firms felt pressure to become more sustainable but “only a minority have a clear understanding of how they are performing”.

A third (35%) said ability to finance change was a barrier, along with freeing up resources (31%). A quarter (27%) said they were frustrated by a lack of consistent environmental, social and governance (ESG) measurement criteria.

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.”

The survey revealed a “consistent gap” of up to 10 percentage points between ESG indicators firms identify as relevant and those they actually measure.

The biggest gaps between ESG criteria relevance and measurement were labour standards (10 percentage points), fair treatment of employees, energy usage and executive salary and compensation (all nine percentage points).

The top motivation for implementing sustainable practices was improved operational efficiency (26%), followed by meeting regulatory standards (24%) and gaining a competitive advantage, growing sales and meeting buyer expectations (all 23%).

The survey, involving 9,131 decision-makers in 35 markets, also found the most common ways businesses were coping with protectionism were cutting costs (30%), joint ventures with local companies (26%), selling through digital channels and platforms (26%), changing their offer in certain markets (25%) and sourcing from local suppliers (24%).

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