ESG joins digital on the radar
Our survey provides ample evidence that CEOs are not only addressing urgent needs but also making the case for longer-term investment. Much the way they had to get past short-term thinking to make necessary digital investments, ESG is now moving closer to the center of the radar.
A majority of US chief executives (82%) see ESG as a value driver to their business over the next few years, and virtually all have developed a sustainability strategy. US companies are beginning to follow the example set by the EU, where ESG reporting is further along and investors have come to see that improved government and community relations can accrue to the bottom line. US companies are improving — their “green bond” issuance leapt 72% in 2021, according to data provider Refinitiv — but they will need to pick up the pace: globally, green bond issuance more than doubled (up 102%).
Encouragingly, the majority of US CEO respondents (73%) have adopted ESG for strategic reasons — such as competitive advantage and lower cost of capital — rather than pressure from regulators. This is notable, because when we last asked US C‑suites about climate change-related impact (in April 2019), only 43% saw ESG as a critical long-term value driver. Now, several US sectors are citing ESG as one of their top value drivers, among them consumer products (85%), life sciences (85%) and financial services (84%). ESG even crops up in our responses on deal motivations. A quarter of US CEOs cite strengthening their ESG ranking or their sustainable footprint as the top impetus for M&A, above such perennial incentives as growing market share or acquiring technology and talent.
Speaking of which, the perpetual “war for talent” appears to be trumped by sustainability throughout our survey. When asked about critical risks to future growth strategy, the acceleration of climate change impacts was cited twice as much as talent scarcity and cost. A similar picture emerges in terms of capital strategy: planned investment in sustainability polls at roughly double the rate of investment in talent attraction and retention. Contrary to some 2021 media headlines, these survey responses suggest corporate leaders perceive the “Great Resignation” as largely baked into corporate growth expectations, even if the war for talent has not entirely subsided as a market force.