ESG (environmental, social, governance): Almost two-thirds (62 percent) of large companies in the G20 countries have indicated that dealing with the climate crisis and the resulting sustainability initiatives pose major challenges for them. 45 percent cite finding and retaining talent based on diversity considerations as a problem. More than a quarter (26 percent) consider a sustainable supply chain to be particularly difficult. The war in Ukraine also shows that ESG is not a 'nice to have', but is becoming a fundamental part of management decisions. This is the result of the current Resilience Barometer 2022, in which the consultancy FTI Consulting surveyed 3,314 companies from the G20 countries.
Companies from Germany are no exception: 60 percent see a major challenge in responding to the climate crisis and planning sustainability initiatives, 42 percent in workforce diversity, 34 percent in the issue of the company's purpose and role in society, and 31 percent in a sustainable supply chain. A quarter (26 percent) consider it difficult to establish transparent reporting that complies with ESG criteria. In a global comparison, Germans are least concerned about the last point: 39 percent of G20 countries named reporting as problematic, while 37 percent of EU countries did so.
Almost half (46 percent) of the companies surveyed with sales of at least 1 billion US dollars see “extreme pressure” for 2022 to further develop the topic of ESG. For companies with sales of between and 1 billion US dollar, only one in three companies indicated this.
Work proactively on ESG issues
"ESG is a trend that has come to stay," says Steffen Puhlmann, ESG expert at FTI-Andersch, the German consulting unit of FTI Consulting that specializes in restructuring, business transformation and transactions. "The issue has already been in focus in recent months, and companies have invested. The current global political situation makes it clear that this was right. The war in Ukraine shows us all that in the future we will have to understand ESG much more intensively as a management tool for sustainable business. Measures implemented to date are therefore more like first steps than benchmarks."
This thesis is supported by the fact that half of the respondents indicated that they are proactively working on ESG issues within the company. Only 36 percent are still waiting and reacting here. This trend has intensified since September 2021: in the survey at that time, only 42 percent rated themselves as proactive and another 39 percent as reactive.
Steffen Puhlmann says: "Questions that will be at the center of considerations in the future: Where do goods and components come from? Under what conditions, including political conditions, is production taking place? How much energy could be saved immediately in the event of a relocation? How safe is invested capital in non-democratic states? What was pioneering thinking a few weeks ago has now arrived with rapid speed in the reality of current management decisions. Many of these questions are no longer 'nice to have' but need to be answered now."
Perception has changed: ESG is also classified as an opportunity by the majority
Along with this focus and activity, 88 percent of the companies surveyed said they no longer just continue to see the risks from regulation and additional financial burdens in ESG. On the contrary: On the one hand, the Ukraine war with its manifold consequences has made them aware of the fundamental necessity. On the other hand, they try to identify opportunities for their own business from a new perspective. One example: 44 percent said they would develop new products and services that better meet new customer demands for sustainability and environmental compatibility - thus identifying new business opportunities. 42 percent are working to improve current services to make them more ESG-compliant(er).
"German SMEs in particular are now under pressure to develop ESG-compliant management approaches," says Steffen Puhlmann. "This is because, as mostly non-reporting companies, they have so far been less affected by regulation in this field. Companies can no longer wait for potential legal obligations to take effect. The challenges are there now. Those who do not start now will face existential competitive disadvantages in the medium term. Because it is then difficult to catch up with these transformations. My recommendation is therefore to examine now where ESG criteria can or need to be taken into account in products, services, the organization and in processes. And to start the transformation immediately."
About the “FTI Resilience Barometer®: January 2022”:
FTI Consulting surveyed 3,314 decision-makers from companies worldwide (most of whom have annual sales of 100 mn up to 3 bn US dollar) about current trends and risks for their own business. The full study can be found here: https://ftiresiliencebarometer.com/
FTI-Andersch is a management consultancy that supports its clients in the development and implementation of sustainable future/performance and restructuring concepts. FTI-Andersch actively supports companies that have to deal with operational or financial challenges and change processes – or want to align their business model, organization and processes for the future at an early stage.
Our clients include medium-sized companies and corporate groups that operate internationally. FTI-Andersch is part of the international FTI Consulting Group (NYSE: FCN) with more than 6,700 employees.