CECP, a global nonprofit organization that brings together over 200 companies, and its Global Exchange Alliance recently published the report "Global Impact Scale: Corporate ESG Action and Social Investment 2022," analyzing global ESG trends, corporate sustainability strategies, and CSR impact. CSRone, a strategic partner of CECP, has compiled five key takeaways for senior decision-makers and sustainability practitioners.
CECP’s Global Exchange (GX), a subsidiary of CECP (Chief Executives for Corporate Purpose), an international organization composed of more than 200 companies worldwide, officially published the survey results of "Global Impact at Scale 2022 edition: Corporate Action on ESG Issues and Social Investments" on January 24, 2023.
According to the report, corporate attention to ESG management continued to rise in 2022, with 96% of responding companies having set carbon reduction targets. The 2021 CECP statistical report indicated that 81% of companies globally have integrated the SDGs into their operational strategies and daily operations, and are expected to elevate ESG strategic planning to core departments, demonstrating the importance companies place on ESG.
This year's report analyzes companies' awareness of sustainability issues, sustainability reporting practices, and the impact of social investment. The data covers 134 benchmark companies in 15 countries worldwide with annual revenue exceeding US$500 million. CECP also referenced the companies' responses against the Bloomberg ESG database to enhance the comprehensive analysis.
The report indicates that a staggering 96% of responding companies have set carbon reduction targets, and 44% have actively set "net-zero emissions" goals. The majority of companies have set a goal of achieving net-zero emissions by 2030, indicating a continued rise in corporate attention to sustainability issues. The report also highlights shifts in corporate community investment. Notably, despite median community investment growth due to the easing of the pandemic, overall investment has declined by 23% compared to last year.
As a turbulent 2022 draws to a close, challenges loom, including the pandemic, shifting international relations, the intensifying climate crisis, competition for corporate talent, and increased sustainability reporting requirements. Companies must prioritize the integration of sustainability within core management and proactively address ESG issues. CSRone, a strategic partner of CECP, has compiled key summaries from this report, providing companies with valuable insights for operational strategy and decision-making.
Key Takeaway 1: 96% of companies have set carbon reduction or net zero targets
The increasingly severe climate crisis and risks are prompting governments and businesses to take action and make commitments. Of the 134 companies that responded to the survey, 96% have set carbon reduction targets, and 44% have announced net-zero goals. Regarding target dates, 38% of companies stated they expect to achieve net-zero emissions by 2030, followed by 2050, with 27% stating they expect to achieve net-zero emissions by 2050.
A report released by the United Nations’ High Level Expert Group (HLEG) in 2022 stated that companies should be more proactive and ambitious in committing to net zero targets and timelines, and set clear short-, medium- and long-term goals to review whether the ultimate goal is achieved, rather than simply announcing carbon reduction or low-carbon targets.
Key Takeaway 2: 60% of companies have sustainability committees, but the link between ESG performance and executive rewards needs to be strengthened.
As sustainability risks gain traction and stakeholders place greater emphasis on ESG management, companies are adapting their organizational structures and operations accordingly. A survey shows that 61% of companies have established sustainability or ESG committees, while another 37%, while not having dedicated ESG units, still regularly incorporate ESG issues into board discussions.
In terms of integrating corporate operating strategies with sustainability, 90% of companies have integrated sustainability issues into their core business strategies, and 70% of these companies stated that the relationship between the two is quite close.
Despite the increasing maturity of sustainability management departments and the growing attention paid to ESG issues by senior management, the report also points out that less than a quarter of the surveyed companies link ESG performance to senior management compensation. Corporate managers may consider how to effectively integrate the two to motivate employees' ESG performance.
Key Takeaway 3: 99% of 134 companies believe disclosing ESG information is beneficial to operational development
In response to increasing demands from investors and global regulations, the number of companies publicly disclosing ESG issues and risks is increasing. Research indicates that 99% of companies believe disclosing sustainability information contributes to their business development, with half believing it helps attract investors. Furthermore, 36% believe it helps attract talent and 42% believe it improves operational efficiency.
The proportion of companies publicly disclosing sustainability data has also increased by nearly 80% compared to 2021. Regarding disclosure frameworks, 98% of companies use voluntary sustainability reporting standards and international sustainability ratings to disclose non-financial information. In terms of usage, the GRI standards and CDP (Carbon Disclosure Project) rank first and second, respectively, followed by TCFD (Climate-related Financial Disclosures).
Key Takeaway 4: Business investment in the community decreased by 23%
ESG issues are diverse, and their interconnected impacts are becoming increasingly close. Despite this, 50% of companies believe that of the three dimensions of E, S, and G, the social dimension (S) is the most complex and difficult to quantify. Community spending, defined as the monetary or in-kind donations and expenditures made by companies on community development, has declined from $393,000 in 2020 to $315,000. While the median corporate investment amount was higher than the previous year due to higher median overall revenue compared to pre-pandemic levels, the percentage of investment in pre-tax net profit actually decreased by 23%. This suggests that while corporate profits have grown, the proportion of investment has not. Incentive programs commonly used by companies to encourage employee volunteering or charitable service, including matching gift programs and paid volunteer time-off, also show a declining trend in the survey.
Key Takeaway 5: 60% of companies increase resources to promote employee care and diversity (DEI) policies
Driven by global social and work environment factors and the Great Resignation movement, companies are now facing a talent shortage. The report points out that amidst this labor shortage, companies must more proactively develop workplace diversity and employee care policies to increase employee engagement.
In response to workers' reflection on the quality of life and work during the epidemic, 97% of companies worldwide have established health and safety policies in 2021, 96% of companies have formulated employee education/continuing training programs, and nearly 70% of companies have stated that they will increase resources on DEI (Diversity, Equity, and Inclusion) policies.
However, the report also notes that despite companies' commitments to and promotion of numerous DEI policies over the past few years, the actual representation of women, people with disabilities, and minorities in employment and management positions has remained low in recent years, with little growth. However, it is worth anticipating that with increased attention to human rights and more stringent scrutiny of corporate commitments by stakeholders, companies will inevitably be required to demonstrate tangible results in line with their commitments.
Source: Environmental Information Center (https://e-info.org.tw/node/236133)
