Business Leaders and Consumers Want It - So Where's The ESG Progress?

And the hunger for sustainability is the same inside organizations. The majority of large companies around the world have made net-zero carbon emissions commitments, and 54% of executives say their companies should address ESG issues – even if doing so reduces short-term financial performance, according to an L.E.K. survey of 400 C-suite global leaders. And the hunger for sustainability is the same inside organizations. The majority of large companies around the world have made net-zero carbon...

And the hunger for sustainability is the same inside organizations. The majority of large companies around the world have made net-zero carbon emissions commitments, and 54% of executives say their companies should address ESG issues – even if doing so reduces short-term financial performance, according to an L.E.K. survey of 400 C-suite global leaders.

But there's also a large gap between the desire for progress and the capacity to make it happen, says John Goddard, Partner at L.E.K. Consulting and Vice Chair, Sustainability.

"Unless the disconnect can be resolved between this desire for sustainability and organizations' current capacity, there is danger both for companies and for society – financial costs, reputational damage and continued harm to the environment," said Goddard.

There are a number of roadblocks – on the corporate side – that have to do with how sustainability is implemented, particularly in terms of the trade-offs that leaders think should be made for longer-term ESG gains. According to L.E.K.'s survey of C-suite leaders, nearly three out of five (58%) executives report there are significant differences of opinion within their leadership teams on how to balance short-term priorities with long-term ESG goals.

And the majority say their companies have yet to figure out how to:

Notably, nearly half of C-suite leaders report that they believe their companies' current products and services don't meet the needs of a more sustainable future – an added concern, particularly given the findings of L.E.K.'s consumer survey.

"There are several potential reasons why ESG is seemingly so difficult to implement for companies, but the good news is that all of them can be addressed and resolved. It will take focus, some mindset shifts and a bit of time," said Goddard, who noted the following hurdles:

While it's not easy and requires new decision-making frameworks, leading organizations are making strong progress. Here's what they have in common, according to Goddard:

"To begin to put all of these items in place, and ensure strategic alignment throughout the organization, senior management and boards must establish an unambiguous and ubiquitous common language for the company's sustainability initiatives. Equally important, leadership will need to precisely choose sustainability goals – and identify the choices that will make those goals achievable," said Goddard.

With strategic choices in hand, leaders will need to analyze and articulate financial and non-financial benefits, ensure the organization is agile enough to respond to new demands and establish KPIs that truly enable accurate measurement of progress.

"Playing to win, as difficult as it will be, has never been more important – both for the long-term value of the company, and for the long-term future that will result from a more sustainable planet and a more equitable society," said Goddard.

For more, please see Global Corporate Sustainability Survey 2022 and Consumer Sustainability Survey 2022.

We're L.E.K. Consulting, a global strategy consultancy working with business leaders to seize competitive advantage and amplify growth. Our insights are catalysts that reshape the trajectory of our clients' businesses, uncovering opportunities and empowering them to master their moments of truth. Since 1983, our worldwide practice — spanning the Americas, Asia-Pacific and Europe — has guided leaders across all industries, from global corporations to emerging entrepreneurial businesses and private equity investors. Looking for more? Visit www.lek.com.

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Allison+Partners
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