ESG C-Suite Survey: Why the Next 1-3 Years Will be Pivotal for ESG in the US Mid-Market
Across the US mid-market, ESG initiatives are trending toward becoming a central part of companies’ business strategies. Businesses are navigating complex regulatory demands and supply chain expectations from their biggest customers. These external pressures, coupled with a commitment to internal ESG targets, ensure that companies are embarking on their ESG journeys, if not today, then soon.
Our C-Suite survey of 100 US mid-market executives and sustainability leaders gives unique insights into how companies deal with these pressures today and in the future. It reveals the primary pressures they are facing, initiatives they are undertaking today, and, in the future, to mitigate those pressures. The main challenges they come up against when trying to get those initiatives off the ground and how they are meeting those challenges head-on with software and consulting solutions.
The Current ESG Landscape
Climate and sustainability regulations have become a critical player in recent years, with new regulations in California, the EU, and many other jurisdictions. Companies are setting ambitious ESG targets, such as achieving net zero within a particular timeline, and they’re feeling the pressure from large companies to share their ESG performance data. As a result, this is leading companies of all sizes to take action on ESG, and nowhere are we seeing this more clearly than in the mid-market.
Accordingly, 82% of the respondents from our survey consider ESG as very or extremely important to their business strategy today, and more than half (56%) consider ESG as extremely important in the coming years.
Software Solutions: The Tech Behind ESG Initiatives
Many companies that view ESG as an increasingly important aspect of doing business have yet to begin measuring their ESG metrics and reporting them.
Today, the sequence of ESG initiatives for most US mid-companies is likely to start with more qualitative target setting, strategy building, and assessing material risks.
However, as companies become more sophisticated, they will begin to quantify their progress with ESG and undertake measurements to track progress toward their goals, perform more informed risk assessments, and begin to report their performance. They will also start to conduct more third-party auditing to ensure they are complying with ESG regulations and reporting their sustainability performance transparently and accurately. 84% of companies expect to have the majority of their initiatives started in the next three years, indicating that the next three years will be pivotal for ESG programs in the US mid-market.
92% of companies plan to use a software solution to get their initiatives off the ground and will look for software solutions that meet where they are in their ESG maturity curve to solve the problems they have when they have them.
Vendor Partnerships: Seeking External Expertise
Similar to responses on software solutions, the majority (73%) of companies anticipate that they will be utilizing the assistance of external vendors to advance their ESG initiatives.
Today, the Big Four and ESG consultants are reported to be the most common vendors. However, as ESG starts to play a bigger role in the wider business strategy and the need for ESG auditing increases, management consultants and other accounting firm’s roles will have the biggest increase. 63% of survey respondents expect to have engaged with an external vendor over the next three years, with the remaining 10% reaching out thereafter.
What is clear across these responses is that mid-market executives believe that the next 1-3 years will be a pivotal time for ESG. As the importance of ESG increases over the next 1-3 years, if they have not already done so, most companies will be launching their ESG initiatives and seeking out the help of ESG software and external expertise.
Companies in the mid-market should consider this a call to action and realize that most of their competitors will have their ESG initiatives started in the next three years. They should consider doing the same to stay competitive. Similarly, software and solutions providers should act today to start building relationships and meet the mid-market where they are in their ESG maturity before the opportunity has gone.
Disclaimer: Good.Lab does not provide tax, legal, or accounting advice through this website. Our goal is to provide timely, research-informed material prepared by subject-matter experts and is for informational purposes only. All external references are linked directly in the text to trusted third-party sources.
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