IBM Study: Data Limitations Hinder ESG Progress
According to a recent study by IBM Institute for Business Value (IBV), titled "The ESG ultimatum: Profit or perish," executives and consumers prioritise environmental sustainability. However, insufficient data poses a significant challenge in achieving personal and corporate environmental, social, and governance (ESG) goals for both groups.
The study indicates that surveyed executives identify inadequate data (41%) as the primary hindrance to their progress on ESG initiatives, followed by regulatory barriers (39%), inconsistent standards (37%), and inadequate skills (36%). Companies struggle to achieve transparency with consumers, a crucial stakeholder, and meet their expectations, as they lack access to, analysis of, and comprehension of ESG data.
Although 74% of surveyed executives believe that stakeholders understand their organisations' ESG objectives and performance, only around 4 in 10 surveyed consumers feel they have enough data to make informed decisions related to environmentally sustainable purchases (41%) or employment (37%).
"Consumer commitment to environmental sustainability and social responsibility has intensified, with consumers expressing their preferences through their purchasing decisions," stated Jonathan Wright, Global Managing Partner of Sustainability Services and Global Business Transformation at IBM Consulting. "As a majority of consumers choose to buy from and work for ESG leaders, businesses must prioritise transparency and overcome barriers to accessing ESG data."
Additional findings from the study include:
Companies are investing in ESG and view it as beneficial for business.
76% of surveyed executives consider ESG central to their business strategy.
Nearly 3 in 4 surveyed executives (72%) view ESG as a revenue enabler rather than a cost centre, indicating that ESG and profitability are not contradictory.
76% of executive respondents agree or strongly agree that their organisations focus on achieving ESG outcomes, not just meeting reporting requirements.
Despite increased consumer commitment to sustainability, consumers feel they lack sufficient information to make informed choices.
Approximately two-thirds of surveyed consumers consider environmental sustainability (68%) and social responsibility (65%) as very or extremely important.
While 51% of respondents say that the increased cost of living has made environmentally sustainable decisions more challenging in the past 12 months, about 6 in 10 state that at least half of their purchases were branded as environmentally sustainable or socially responsible.
Only 1 in 3 surveyed consumers claim to have enough information to make sustainable investing and saving decisions.
Executives acknowledge that their companies have not made significant progress towards ESG goals, citing data challenges as a hindrance to measuring progress and meeting consumer demands.
95% of surveyed executives report that their organisations have developed ESG propositions, but only 10% state that their organisations have made significant progress towards them.
Almost 3 in 4 surveyed executives (73%) mention that their organisations struggle with managing an overload of manual data, while 7 in 10 state they face difficulties in consolidating or manipulating data.
The study highlights ESG leaders, a subset of respondents who have greater maturity in operationalising ESG and are experiencing higher revenue, improved profitability, and deeper customer engagement by approaching ESG as a transparency initiative that creates strategic business opportunities.
These role models offer a roadmap for organisations seeking to overcome data-related challenges and drive sustainable change, including automating ESG processes and reporting capabilities to keep data up-to-date, leveraging AI for enhanced insights into performance and forward-looking analysis, aligning with ecosystem partners on ESG metric definitions and standards, and proactively establishing ESG data governance principles with stakeholders.
"Data is the lifeblood of ESG. The time is now for enterprises to take action. By operationalising ESG plans, enterprises empower decision-makers with information to improve their ESG impact on a daily basis," emphasised Wright. "Organisations seeking to increase stakeholder support and meet ESG reporting requirements should implement a sustainability roadmap that encompasses technologies, services, and ecosystem partners to position themselves for greater business success and address regulatory compliance," added Wright.
To access the full study, please visit.
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