20 March, 2023
Almost all decision-makers surveyed set ambitious targets but only a few companies succeed in operationalising ESG targets or using high-quality ESG data to steer the transformation. Only a subset of the respondents – those defined as the ESG leaders or champions (6%) – successfully transform entire value chains to be sustainably competitive.
Companies globally are setting ambitious environmental, social and governance (ESG) goals, but only 6% are aggressively implementing measures to meet them. Most companies (53%) remain in the relatively early stages of ESG transformation, implementing basic measures like off-setting carbon emissions with CO2 certificates. These are some of the key findings from PwC’s global study ‘ESG Empowered Value Chains 2025’, which surveyed over 900 executives worldwide on the status of their ESG transformation. The study suggests a general lack of urgency to embrace more advanced ESG efforts such as redesigning products or improving diversity and inclusion. Meanwhile, a small subset of ESG Champions (6%) is moving quickly to embed ESG measures across their entire value chains and ultimately make themselves, and their suppliers, more sustainable and competitive.
In Ireland, 26% of Irish CEOs recently confirmed in PwC Ireland’s 2023 Irish CEO survey that they had completed implementation of initiatives to reduce their company’s emissions and a further 51% said that this was in progress. 32% said they had made a net zero commitment with a further 37% saying their company is working towards this commitment.
According to Mark McKeever, Director, PwC Ireland Advisory Consulting: “In Ireland, we also see lots of companies in the early stages of developing their ESG vision, objectives and strategies - however, in our experience, few are getting into the detail of implementing actual changes to their business models.”
Many companies face enormous pressures. Continued economic uncertainty, lingering impacts from COVID-19 and the ongoing war in Ukraine continue to result in supply chain disruption, raw material shortages and inflation. For example, 42% of companies surveyed cited high costs and insufficient budgets as the most significant challenge. At the same time, companies are under greater scrutiny from consumers (including employees), investors, and regulators to transform businesses to comply with a growing body of environmental and social standards.
Áine Brassill, Partner, PwC Ireland Advisory Consulting, commented "The ESG transformation can appear as an added burden in these times – the transition is costly, demanding and complex but it needs to happen to ensure the company’s survival. Stakeholders, from employees to investors, are demanding it. It is of existential importance for companies to know the ecological and social consequences of their actions and align their activities with ESG standards. Some decision makers also see the benefits of an ESG pioneer role. Because, like digitalisation, the benefits of the transformation are greater the earlier it occurs. The pioneers are able to quickly learn from mistakes and evolve. Those who hesitate have to invest a lot to catch up. It's better to be an ESG champion than a follower.”
The study shows a major shift in thinking about how transforming operations to meet ESG standards can ultimately make companies more resilient and competitive. For the Champions in the survey this has meant investing heavily and forgoing short-term profits to transform companies to be sustainable long-term. For example, 92% of Champions have measures in place to manage resource efficiency as compared to 65% of non champions. Similarly, 81% of champions have a circular business model compared to 45% in non champions.
Mark McKeever added: “ESG Champions share similar traits. They are typically bigger organisations with revenues greater than €3 billion. They are better at making plans, supporting them with concrete measures and following up on them. ESG Champions have detailed short and long-term roadmaps, covering most of their value chains, as well as oversight on human rights risks, and robust, product specific standards. More than 70% of their products and services are in line with ESG objectives.They have ESG targets and KPIs tied to corporate targets and these are broken down into operational functions, and subject to regular monitoring. 81% of Champions are significantly realigning their business models, for example, by moving towards circular business models or adjusting product portfolios to match ESG targets. By comparison, only 15% of other companies are doing this.”
Champions are more digitally advanced, with higher levels of data transparency and accessibility. 81% of survey respondents say their ESG data is fully available and used for decision making, compared to just 13% of other companies that say the same.
Mark McKeever continued: “It seems that ESG champions are also more resilient when faced with ESG challenges. On average, Champions are 25% less likely to cite challenges holding back implementation such as cost, access to data and unclear business impact. Champions are significantly less affected by issues of great concern to other companies such as insufficient top management support, a lack of ESG strategy and unclear responsibilities – for example, just 13% of Champions cited these challenges versus roughly a quarter of other companies. For Champions, their main concern is inadequate access to data.
The research reveals an emerging gap between those companies that are acting quickly to broadly implement ESG standards and those that aren’t. While some act quickly and implement ESG standards on a broad basis, those who merely agree on the minimum fall far behind. As Champions focus on areas like advanced tracking and collaboration with suppliers, they improve their entire value chains, making it harder to compete for companies that haven’t taken these measures.
Mark McKeever concluded: “While the ESG transformation may affect the competitiveness of companies in the short term due to rising costs, the advantages outweigh the disadvantages in the long term. These include more transparency in supply chains, lower energy costs, lower material costs, an innovative edge and, as a result, increased investor interest. It also has reputational and employee retention advantages. Companies that lag behind may soon not be able to catch up."
About the survey:
PwC surveyed over 900 c-suite executives, senior manager and sustainability leaders in 30 countries worldwide in late 2022. The companies were from nine key industries including Retail and Consumer Goods, Pharma and Med Tech. The objective was to understand how far companies have progressed with setting ESG targets and implementing strategies.
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