project findings and recommendations report

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The organization’s priorities, respondents report, exceed merely conforming to industry standards or regulatory requirements and aim toward unlocking new opportunities. We are not able to verify the ESG performance of respondents’ organizations, because we do not ask respondents to identify their organizations.-point to seven organizational traits.įirst, their organizations approach ESG from a growth perspective. The 107 respondents who describe their organizations as ESG leaders are effectively the top decile from among the survey results. Survey respondents who report that their organizations have both created financial value and increased broader impact from ESG-the two conditions for what we call “ESG momentum” 4 These organizations leading on ESG dimensions are ones that, according to respondents, have somewhat or significantly improved their ESG performance over the past three years, significantly better ESG performance than industry peers, and seen modest or significant value from their ESG investments over the past three years. They also report federated governance of ESG projects much more often than respondents from smaller organizations do, and they say their companies embed key ESG impact metrics into leaders’ incentives more often than their smaller-company peers do (Exhibit 3). 1 Looking at data from respondents at organizations with at least $1 billion in reported annual revenue, an ESG team of three people is in the 25th percentile for size, and a team of 15 is in the 75th percentile. Those at larger organizations are also nearly twice as likely as others to say their organizations have an ESG team of more than five employees, with a median of eight employees. At large organizations, respondents say the leader of ESG topics also oversees a variety of ESG-related functions-the corporate affairs or government relations, legal, communications, and philanthropy functions-much more often than smaller-organization respondents do. While 24 percent of these respondents say their organizations have a chief sustainability officer in place who oversees ESG topics, just 10 percent at smaller organizations report that role, and they are much more likely than their large-company peers to say no one oversees ESG topics at all. What’s more, responses from larger companies suggest differences in the leadership and organization of their ESG efforts. 3 For more, see “ Does ESG really matter-and why?,” August 10, 2022. For example, one-third of respondents say their organizations’ work with ESG topics has a strong positive effect on their own commitment to the organization and, in turn, to overall employee retention, consistent with the notion that ESG can underpin both value and values.

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More than two-thirds of respondents say their organizations have achieved broad impact from their ESG efforts in the past three years, and 43 percent report that their organizations have captured financial value from their ESG investments over that span-suggesting that the full effects of ESG are multivariable and may take time to fully capture. Survey respondents report that their organizations are not just paying lip service to ESG: many say their organizations are making meaningful ESG changes that have demonstrable benefits. While environmental topics are recently the ones making headlines, just one-third of respondents rank environmental issues as their organization’s greatest ESG priority. More than nine in ten respondents say that ESG subjects are on their organization’s agenda. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP. Nearly 30 percent of respondents work for organizations that they say have an annual revenue of $1 billion or more, and a similar share say they work for publicly held companies. Looking by industry, the largest share of respondents-17 percent-work in financial services. The full range of regions, industries, company sizes, functional specialties, and tenures. 2 The online survey was in the field from November 11 to November 26, 2021, and garnered responses from 1,141 participants representing The latest McKinsey Global Survey on environmental, social, and governance (ESG) issues asked more than 1,100 respondents in more than 90 countries how their organizations are rising to this challenge. 1 For more, see Krysta Biniek, Vivian Hunt, Robin Nuttall, Lucy Pérez, and Hamid Samandari, “ Does ESG really matter-and why?,” McKinsey Quarterly, August 10, 2022. It is becoming increasingly essential for companies to understand and address the effects that externalities can have on their social license.

Project findings and recommendations report