Employers Focus on Environmental, Social, and Governance Strategies

A new report highlights the environmental, social, and governance priorities of global business leaders.

As we enter a new year with an invigorated focus on the future, issues such as environmental sustainability, diversity and inclusion, and business transparency will continue to be at the forefront of business planning. According to a new report, executive business leaders around the world are prioritizing their environmental, social, and governance (ESG) strategies.

Willis Towers Watson conducted the 2020 ESG Survey of Board Members and Senior Executives during September and October 2020, with results based on responses from non-executive and executive directors, and non-board member management executives who employ 2.2 million workers globally (North America, Europe, Asia, Africa and the Middle East).

What is Environmental, Social, and Governance (ESG)?

Environmental, social and governance (ESG) are a set of criteria and standards for corporations and businesses that socially conscious investors use to screen for potential investments. With the environment top of mind for many employers and employees, a company may be evaluated based on their energy use, taking into consideration clean energy, pollution, or even treatment of animals. Social criteria may consist of how a company fosters relationships with other businesses as well as local communities, considering the company’s values and regard for employee wellbeing. Governance criteria may consider transparency, especially around political contributions and accounting, ensuring there are no conflicts of interest.

The Right Thing to Do, while Strengthening Financial Performance

According to the report, boards are putting more emphasis on environmental, social and governance priorities, particularly around diversity and inclusion, climate change, and overall governance. Four in five respondents (78%) are planning to incorporate more ESG into their executive planning over the next three years. Why the shift towards ESG priorities? Most respondents indicated that not only is it the right thing to do, but 78% indicated they believe ESG is a key contributor to strong financial performance. Overall, ESG priorities are driven by “the desire to increase their organizations’ long-term value (79%), moral and ethical reasons (80%) and alignment with the business strategy (74%).”

Employers are Using the ESG Lens

Nearly half (46%) of respondents indicated that they have developed listening strategies to engage deeper with employees, while three in 10 have even created a new executive role or other positions to drive ESG strategy. As more ESG-related matters come to the forefront of business priorities, respondents indicated that their full board is most likely to focus on succession planning (77%), D&I (66%) and culture (65%). This includes conducting a pay equity analysis (51%), and promoting an inclusive culture through increased communication of policies and benefits (44%).

From ESG Planning to Action

While the majority of respondents are planning on using ESG or have incorporated ESG into their short- and long-term goals, there can also be challenges to execution. When incorporating ESG metrics into executive compensation plans, respondents indicated the most common challenges are “setting targets (52%), identifying (48%) and defining (47%) performance metrics and defining time periods to affect meaningful change (35%).”

Whether it’s developing a diversity, equity, and inclusion (DE&I) plan, engaging employees through employee sentiment analysis, leading on conversations around environmental sustainability or compensation best practices, mobility professionals are at the forefront of ESG strategy. Business leaders looking to combine their ethical and financial priorities in the coming years can count on those in the mobility sphere to take their ESG planning to fruition.