A global study undertaken by Abu Dhabi Sustainability Week, Masdar and Harvard Business Review revealed mixed results for businesses in terms of adopting ESG practices and implementing ESG strategies.
Encouragingly, the report, Reaping Returns on Environmental, Social and Governance Investments, which surveyed 249 executives from global businesses across a range of industries, found that 83 percent of respondents indicated their organisation will increase investment in ESG initiatives over the next 12 months.
However, only nine percent said they had already seen a financial return on ESG investment – the good news is that 22 percent believe they will see a return on investment within a year, while 41 percent said it would take two to five years. Other findings of the report include 27 percent of respondents admitting they are yet to put a formal ESG strategy in place and 10 percent saying they are not currently working to improve ESG performance.
Abu Dhabi Sustainability Week hosted Alex Clemente, founding managing director of Harvard Business Review Analytic Services, examined the report findings at a virtual session and put ESG into an important historical context, in a webinar moderated by Zainab Al Ali, head of outreach and stakeholder relations at Masdar.
Clemente says that while the main goal for companies is profits, “many senior managers and organisations around the world, and their boards of directors, are waking up to the notion that providing positive returns, not only for shareholders, but also for society and the environment, and being able to manage it [gives organisations a] greater sense of purpose.”
Even if ESG is considered to be a relatively new term, Clemente pointed out that the principles of ESG are not new. He cited the example of Taj Hotels – when he visited one of the hospitality company’s properties in Mumbai, there was a quote on the wall in reception that said, “In a free enterprise, the community is not just another stakeholder in business, but it is, in fact, the very purpose of its existence.” This quote was from Jamsetji Tata, founder of Tata Steel, in the 1890s.
Clemente says that Tata’s words reflect the idea that “without a community to serve, there is no business.”