- Nearly half of companies surveyed started addressing ESG within the past three years
- European companies lead slightly in sustainable business efforts compared to the U.S.
- Digital tools improve collaboration, enhance data analysis, and streamline company ESG reporting
The Full Article:
Nasdaq’s 2023 ESG & Climate Survey spotlights challenges and opportunities that global companies are facing to reduce their carbon footprint. In this post, we examine the survey responses and outline how manufacturers can address global warming while reaching their business goals. The survey also explores how executives drive their environmental, social, and corporate governance (ESG) efforts by structuring their sustainability teams, developing risk mitigation strategies, and investing in technologies.
Key ESG and Sustainability Report Findings From Nasdaq
Nasdaq surveyed 100 ESG decision-makers at public organizations with more than $250 in annual revenues for the survey. Nasdaq’s latest survey findings quantified the ESG performance of these organizations, highlighting the following key areas:
ESG Strategy Implementation
Within the past three years, 45% of companies started tackling ESG and sustainability, compared to only 9% addressing environmental sustainability for more than five years. Moreover, 39% of companies have yet to integrate ESG ratings and rankings management into their sustainability strategies.
Global Corporate Sustainability Performance
Organizations in Europe have a slight maturity advantage in implementing sustainable business initiatives. Sixty percent of European companies have worked on ESG strategy for three years, in contrast to 50% in the U.S.
Most Critical ESG and Sustainability Themes
According to the survey findings, 62% of respondents believe product stewardship is the most critical factor for their organization. This is followed by supply chain sustainability (58%), reduction of carbon emissions (56%), governance initiatives (56%), and climate risk management (54%).
ESG and Sustainability Team Structure
Forward-thinking organizations establish dedicated sustainability teams to meet ESG targets and mitigate climate change impacts.
According to the survey, 48% of respondents say their sustainability team comprises six to 15 members. Meanwhile, 39% of respondents report having a team of one to five members, while 11% have units with more than 15 people. Only 2% of organizations state that their team consists of individual contributors.
Furthermore, 64% of U.S.-based organizations say their specialized sustainability teams comprise at least six members. Nasdaq’s research uncovers the various sources of senior team members contributing to sustainability teams’ ESG objectives. These sources include:
- 47%: Voluntarily take on responsibilities on top of their current role
- 39%: Migrated internally from other departments
- 14%: Recruited as dedicated team members
As the importance of sustainability grows, 25% of today’s organizations view it as an opportunity to gain a competitive advantage. For instance, industrial manufacturers strive to meet Leadership in Energy and Environmental Design (LEED) standards to enter a market where LEED building certification is required. Manufacturers lacking LEED-compliant solutions fail to tap into this market opportunity, negatively impacting their bottom line.
Navigating ESG and Sustainability: Challenges and Opportunities
According to the latest Nasdaq survey, organizations face significant challenges in addressing climate change due to high costs, stringent sustainability regulations, and fragmented collaboration among internal cross-functional teams.
Nasdaq provides further insight into these challenges by ranking their impact on implementing ESG and sustainability strategies. For instance, the report states that the top three challenges include:
- 34%: Executing reporting frameworks, standards, and regulations (e.g., SEC Climate Disclosure)
- 22%: Collecting and collating ESG and sustainability data
- 22%: Responding to information requests from stakeholders (e.g., institutional investors)
Additionally, 56% of companies believe investing in technology can help them improve their ESG performance. However, investing in new tools can present unique challenges for businesses, including:
- 54%: Facing poor integration of solutions into existing systems
- 52%: Seeing a low return on investment (ROI) from new technology investments
- 50%: Experiencing a lack of stakeholder buy-in for new and advanced solutions
- 44%: Perceiving a lack or shortage of viable sustainability-based solutions
- 38%: Lacking clear prioritization of sustainability and emissions reduction targets
- 36%: Dealing with budgetary restrictions within their organization
Today’s organizations should integrate sustainability into their critical operations to address shifting customer demands and regulatory requirements. According to Nasdaq, “Companies should consider digital tools … to plug gaps in their expertise and capabilities, which in turn will demonstrate their commitment to genuine improvement of sustainability performance.”
Investing in digital technologies enables companies to connect internal teams and quickly share actionable carbon dioxide equivalent (CO2e) emissions data. Additionally, digital tools provide the features and capabilities that will allow organizations to:
- Baseline their current CO2e and leverage this data for future carbon-reduction efforts
- Assess design-stage cost and carbon simultaneously and make business decisions holistically
- Simplify reporting and traceability to meet sustainability regulations (e.g., EU Taxonomy)
- Acquire real-time collaboration features to align cross-functional teams
Want to learn more? Get our free guide to developing innovative products for a sustainable future.
Driving Sustainability and Future Competitiveness
Companies increasingly take steps to reduce their negative environmental impact, ensuring they innovate for a profitable and sustainable future. This trend is positive, but organizations across industries still have work to do. By prioritizing sustainability and making strategic investments, teams can improve their ability to remain competitive in the future and effectively reduce carbon-related risks.