20 January 2023
Majority of Firms Believe ESG Reporting Will Improve Corporate Behaviour
McCann FitzGerald survey shows organisations are positive about the effects of ESG reporting on organisational behaviour and investment, but a majority of companies raise concerns about possible greenwashing in their industries.
Almost three-quarters (72%) of organisations in Ireland believe that mandatory reporting on their environmental, social, and governance (ESG) performance will influence corporate behaviour in this areas, while 63% believe that actively reporting on ESG issues will attract investment in their organisations, suggesting a commercial benefit to reporting.
The results come from today’s publication by law firm McCann FitzGerald LLP of its ESG Snapshot Ireland 2022 survey, which assesses organisations’ views on ESG issues in Ireland ahead of the implementation of the EU’s Corporate Sustainability Reporting Directive next year. The Directive will require large and listed companies to publish information relating to their performance on ESG topics annually.
Accordingly, ESG issues enjoy a growing corporate profile, with 88% of respondents reporting that ESG is a strategic priority for their organisations, while 82% see their ESG strategies as being both meaningful and impactful.
In spite of the positive view of the growing focus on ESG issues within organisations, some concerns are evident. Almost six in 10 companies surveyed believe that other organisations within their industry are overstating the sustainability of their operations, while difficulties measuring effectiveness (61%), focus on the bottom line (56%), and a lack of resources (54%) were all cited by respondents as barriers to implementing sustainability initiatives.
The survey also found that, while there is significant suspicion amongst organisations that their competitors are exaggerating the sustainability of their operations, only one in ten felt their own organisations to be overstating their performance on sustainability, highlighting a potential between gap between internal and external perceptions of companies’ ESG performance.
Only one-in-three organisations currently subject their sustainability reporting to external verification. However, two-thirds of organisations said their ESG strategies were target based, with achievement of net zero emissions (57%) and adherence to United Nations Sustainable Development Goals (30%) being the most frequently cited basis targets.
Speaking about the survey results, Valerie Lawlor, Partner and Head of McCann FitzGerald’s Energy group said:
“The results of this survey demonstrate that organisations in Ireland are already thinking deeply about ESG issues and putting the strategies in place necessary to deliver results in this area. This has even extended to relationships with suppliers, with more than half of organisations now imposing ESG requirements on suppliers as part of their procurement processes.
“However, with the upcoming Corporate Sustainability Reporting Directive and other EU legislation creating further reporting requirements, and with public and corporate scrutiny of companies’ ESG performances growing, organisations will need to do more to address concerns that their level of activity on ESG issues may be overstated.”
Éamon Ó Cuív, Partner in McCann FitzGerald’s Finance practice, added:
“One-third of our respondents reported that their investors and lenders had imposed ESG reporting requirements to access finance and this number is likely to grow in the coming years. Accordingly, ESG reporting and a broader positive sustainability profile is likely to quickly become a necessity for businesses to access necessary levels of investment, adding another driver for activity on this already important issue.”Download PDF