Don’t sacrifice profits for higher ethical standards, say workers

Should you sacrifice your profits to achieve ethical standards

Nearly half (47 per cent) of UK workers believe companies can achieve higher environmental, social and governance (ESG) standards without sacrificing profitability, according to new research. Another one in eight (12 per cent) say profits should be impacted if necessary to raise such standards but a quarter (24 per cent) say they would be unwilling to accept sacrificing profitability for the sake of ESG.

Around two in five (38 per cent) UK workers believe their company’s consideration of environmental, social and governance (ESG) issues has risen over the last five years, according to new research. Only 2 per cent believe these concerns have reduced.

The research, which surveyed a panel of respondents comprising owners, chief executives and directors as well as other staff, reveals that more than half (52 per cent) of workers believe companies should consider ESG issues because it is morally the correct thing to do.

But the research also reveals a degree of pragmatism: 28 per cent say ESG issues need to be considered to legally protect their company, while over a quarter (26 per cent) say that ESG considerations are ultimately necessary to be more successful. This latter belief is not skewed in any particular generation – while 25 per cent of millennials (18-34 year olds) believe this, 26 per cent of 35 to 55-plus believe this, too.

Despite the growing concerns, UK companies are remarkably reticent when it comes to highlighting their efforts with regards to ESG: the majority of workers (53 per cent) say their companies do not publicise their ESG activities at all. The most popular platform for doing so is internal communications but only one in five (21 per cent) uses this. Other methods include the annual company report (17 per cent); press releases (11 per cent); sponsorship (10 per cent); and advertising (9 per cent).

Interestingly, 27 per cent of respondents say they have no idea whether their company is planning to improve its approach to ESG issues.

Although entering awards can be used to highlight ESG activities, only ten per cent of companies do this, while nine per cent collaborate with an external partner such as a charity or community group and nine per cent hold consultations or events.

Mark Evans, director, Better Society Awards, comments, ‘Many companies now can see that their organisation’s ESG position is driving higher long-term profitability. This represents a sea change in perception; ESG was only notionally considered in the previous decades, but now is not only fully accepted, but seen as no impediment to profit.’

Jonathan Flint, managing director of Citigate Dewe Rogerson, adds, ‘Public consciousness of ESG issues continues to rise, putting ever more pressure on companies to demonstrate good behaviour. Despite this, it is surprising that our research shows how little companies are doing to highlight their ESG activities. The potential to enhance their reputations further with comprehensive communications is substantial.’

James Endersby, managing director from Opinium Research, comments, ‘It’s fantastic to see ESG issues becoming more of a consideration for businesses over the last five years and encouraging that many feel they can incorporate this consideration into their business strategy without sacrificing profits.’

Reputation among clients and potential clients is seen as important to their organisation by four in five (81 per cent); three quarters (75 per cent) believe that their company cares how the public perceives them and two thirds (67 per cent) think that the reputation of their organisation to employees and potential employees is significant.

Further reading on ethical standards

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