EY research identifies ESG to be a top investment priority globally

The consulting, assurance, tax, and transaction service firm Ernst & Young (EY) published a new survey identifying that ESG matters are a primary priority for Chief Financial Officers (CFOs) across the globe. However, the research also uncovered that although CFOs are putting sourcing ESG investment at the top of their list, it would also be the first budget cut if the company was struggling.

What were the main findings of the research?

EY polled 1,000 CFOs from 21 countries. The survey reported that ESG was voted a top priority, as well as technology and digital innovation at 43 percent. Other categories CFOs ranked included customer experience and offerings (34 percent), supply chain resilience (37 percent), ecosystems and partnerships (29 percent), portfolio optimisation (34 percent), talent and culture (20 percent), and market entry or exit (28 percent).

Out of all CFOs polled in the survey, 70 percent included organisations with revenues between $1 billion and $5 billion. The remaining organisations generated revenues above $5 billion per year. When CFOs were asked which aspect they would cut investments from if needed, 37 percent said ESG would be the top category. CFOs that actively engaged in driving transformational change showed a more extreme stance towards ESG practices.

Within the poll, 51 percent shared that ESG held the utmost importance to them. This compared to 42 percent who said ESG was not hugely important to them or their organisation. Approximately 44 percent of those polled said they would cut funding for ESG and climate change initiatives if necessary. However, 32 percent opposed this and responded they would still prioritise climate action. 

The study also identified that 14 percent of finance leaders driving a transformational agenda are 1.4 times more likely to believe they have a best-in-class or above-average finance function currently. Not to mention, they were also 1.7 times more likely to believe they would achieve best-in-class status following transformation.

What does the EY research mean for climate action?

The study urged the growing demand urgency of prioritising ESG initiatives amongst CFOs. This demonstrates how businesses are seeing the importance of acting on the environmental crisis and the critical role their business has to play in achieving a greener world for all. 

Many businesses are coming to realise that embedding ESG elements into high-level, corporate decision-making is simply good for business. This is because transparency and accountability can help them to assess, determine, and manage their ESG risks adequately. 

Beyond this, investing in ESG capabilities can help them report and collect data that can assist in preventing operational, financial, reputational, and legal risks associated with the organisation’s ESG activities. 

ESG is not only catching the attention of businesses, but it is also becoming an important issue for investors. Implementing ESG practices shows that a business is committed to having a long-term positive impact. These businesses are increasingly attractive to potential shareholders who want to invest in socially responsible, ethical, and sustainable enterprises.

Final thoughts

It’s fantastic news to hear that so many businesses are considering ESG investment to be an important factor. Whilst many would stop investing if they were struggling, this is still a sign that ESG is becoming increasingly attractive to businesses, customers, shareholders, and team members alike. The Diploma in Business Sustainability course offered by the Institute of Sustainability Studies, a leading provider of sustainability courses online, exists to help businesses determine their first steps in implementing ESG initiatives throughout their organisation.