New data from Sphera reveals that, despite promises to the contrary, companies struggle with implementing and disclosing progress on their sustainability efforts.
CHICAGO, IL (September 30, 2021) – Though pressure is growing from all corners—from investors, to governments, to boards of directors—companies worldwide struggle to report progress on their Environmental, Social and Governance (ESG) goals. Indeed, just 38% of businesses publicly communicate their sustainability performance, according to a new survey from Sphera®, a leading global provider of ESG performance and risk management software, data and consulting services.
It’s not just a matter of disclosing progress on their objectives, however; companies are also behind the curve when it comes to clearly setting their ESG goals in the first place. Less than one-third (29%) of the respondents said they have set and communicated their sustainability targets, and even fewer—16%—have set emissions targets in accordance with the Science Based Targets initiative (SBTi) framework.
This marked lack of ESG transparency highlights the persistently wide chasm between ESG promises and action in the private sector. In the absence of significant, enforceable regulations worldwide, companies have largely been left to voluntarily make commitments, but with no meaningful mechanisms to either measure their progress or hold themselves accountable to them. About half (51%) of companies surveyed affirm that their senior management has made sustainability commitments, but only 21% say they have a clear roadmap to implementation, and just 26% say they have fully integrated sustainability into their business strategy.
“It’s easy to ‘talk the talk’ when it comes to corporate ESG initiatives, but much harder to ‘walk the walk,’ ” says Paul Marushka, Sphera’s CEO. “Businesses have largely been left to their own devices to establish and measure their sustainability performance, leading to a constellation of voluntary frameworks that ultimately disincentivize meaningful action. But with the Intergovernmental Panel on Climate Change’s recent report providing its strongest warning yet – indicating that half-measures will no longer cut it – and the upcoming COP26 conference promising to hold the business community to account, organizations need to start making good on their promises and show tangible progress.”
These findings are from Sphera’s Sustainability Survey 2021, a survey of 218 global business leaders evaluating their sustainability metrics, measurement and progress.
Additional findings from the survey include:
Scope 3 is missing from the menu. Though reducing emissions across the value chain is essential to meeting decarbonization targets and—for those businesses who have committed to them—achieving net zero emissions, very few companies have accounted for Scope 3 emissions in their sustainability plans. Only 13% of businesses surveyed said they have identified all relevant Scope 3 categories and completed a corresponding hotspot analysis; 29% say they consider the entire value chain when calculating their corporate emissions baseline or carbon footprint.
“Scope 3 emissions can make up the vast majority of a company’s overall carbon footprint,” Marushka added, “which means any sound sustainability strategy must involve an assessment of the supply chain and a commitment to working with suppliers who are also taking measurable steps to reduce their emissions. The end result ultimately creates a multiplier effect for both companies’ sustainability efforts.”
Poor data quality can stymie even the best efforts. Only a minority of respondents (16%) use data from established commercial databases to quantify their corporate carbon footprint; another 14% say they use high-quality, industry-based data for baseline assessment at the product level. In practice, this means many more organizations are using suboptimal datasets, such as spend-based, input-output databases, to measure their emissions. These types of top-down, nonspecific data sources can lead to inaccurate assessments, further exacerbating the gap between sustainability promises and outcomes.
The middle market struggles the most. Perhaps unsurprisingly, large organizations with more than $1 billion in revenue are more likely to be rated as optimized (34%) in terms of sustainability maturity.¹ At the same time, 39% of small businesses with less than $100 million in revenue are considered optimized. Midsize businesses trail both, with an optimization rate of just 30%. In fact, midsize businesses are more likely than their larger or smaller counterparts to not exceed basic compliance requirements (25% vs.13% for smaller organizations and 6% for larger organizations).
About the Sustainability Maturity Survey 2021
Sphera partnered with the University of Esslingen in Germany to design and field a survey of companies throughout Europe, North America and Asia-Pacific. Respondents represented businesses in a wide range of industries, including automotive, construction, education, health care, oil and gas, manufacturing and technology. The survey was conducted between April 7 and May 3.
Sphera creates a safer, more sustainable and productive world. We are a leading global provider of Environmental, Social and Governance (ESG) performance and risk management software, data and consulting services with a focus on Environment, Health, Safety & Sustainability (EHS&S), Operational Risk Management and Product Stewardship.
¹According to Sphera’s Sustainability Maturity rubric, an “optimized” business leverages ESG software and data resources to go above and beyond meeting compliance requirements to help find efficiencies, increase productivity and innovation, reduce costs and mitigate risks. A “leader” is at the head of the competitive pack and is shaping the future of its sector through its sustainability initiatives.