Businesses are facing acute financial pressures and over the coming months will have to make difficult decisions about how to recover from the economic impact of COVID-19. There will be differing views about the priorities that should guide those decisions, but Yonder research shows that businesses with purpose-led strategies that align environmental, social and governance (ESG) priorities with commercial imperatives are most likely to succeed.
The ESG agenda has gained momentum over the past decade, with organisations around the world looking to deliver value beyond profit and actively integrating the principles of responsible business practice into their long-term strategies. But as the UK went into the first lockdown in March, some wondered about the ability of businesses to continue to commit to their ESG goals and initiatives. As many firms faced and continue to face serious financial consequences, perhaps these issues would become less of a priority.
In reality the opposite seems to be happening. For instance, at the beginning of June 2020 more than 200 UK leading businesses urged the Prime Minister in an official letter to deliver “a clean, just recovery, that creates quality employment and builds a more sustainable, inclusive and resilient UK economy for the future.” Among signatories were leading names across all sectors, including HSBC, Lloyds Banking Group, National Grid, BT and many more. Another large organisation, Danone believes that becoming a mission-driven company, with long-term social and environmental goals will provide it with a competitive advantage. Having reported the good performance of asset classes with high ESG ratings in May and June, financial analysts argue that incorporating ESG principles into business strategies makes companies better prepared for unexpected shocks like COVID-19.
What these investors and business leaders have recognised is that consumer opinions have changed, something clear to see in our tracking of public attitudes throughout the pandemic.
First, the environment. The results of our weekly COVID-19 opinion tracker show that the current crisis has not diverted public attention away from this issue. Far from it; climate change and the future of the environment remains one of the top public concerns (63% said last week that they were at least “fairly worried” about it), alongside health and financial worries triggered by the pandemic. There is also a clear expectation that companies and industries continue to take action on the environment and are transparent about outcomes, as 80% of the public agree that it is important for businesses to measure and disclose their environmental impact. Reduced air pollution, re-emerging wildlife and plunging oil prices once again brought the extent of the environmental challenge to public consciousness.
Second, social issues. The pandemic has also brought the importance of community cohesion and support further into the spotlight, and in turn this has prompted many to reflect on broader social issues faced by the country. Our opinion tracker shows that the majority of the public think that the coronavirus crisis has exposed the magnitude of inequality in the UK (67%) and that the current situation is making the physical and mental health gap between rich and poor worse (68%). Moreover, since we started tracking their sentiment at the beginning of lockdown the proportion of the public that expects brands and large organisations to play a greater role in society by supporting local communities has never dropped below 60%.
Businesses will also be judged on the efforts they make to care for their staff. 69% of the public want companies to demonstrate how they will ensure the safety and well-being of their employees as they return to work. While for many businesses furloughing and redundancies might be inevitable, the way they handle it and the support that they provide to their employees during this time will also be critical to their reputations as employers. Job security (38%), professional development and future careers (41%), and the ability to find a new job when needed (53%) are a worry for many. And the concern is greater among young people: 64% of 18-24 years old are concerned about being able to find jobs and 54% worry about developing their careers.
Third, governance. Ultimately, how well businesses will be able to respond to this crisis and navigate their way out of it will depend on the success of their governance. The effectiveness of management is critical now when often difficult choices about the survival of companies are being made and will be even more important as they start planning for the post-COVID 19 future. The overall message is clear: the public wants and indeed expects businesses to place ESG at the heart of their recovery strategies. Whatever commitments firms choose to make, being able to drive them within the organisation and measure their impact will be crucial in order to earn credibility among customers and stakeholders and to get a buy-in from shareholders and investors. As of now, the public is still undecided in their overall judgement of UK businesses’ response to the crisis: 32% believe that they have made an impressive contribution, 33% think they have contributed poorly and the remaining 35% are neutral. In order to convince consumers that businesses understand and are prepared to act upon their ESG responsibilities, organisations need to gain an understanding of this new reality, explore the opportunities it presents to project a values-driven corporate purpose, and create strategies that will deliver real impact. Those that do will come back not just faster, but better too.
Yonder is a consultancy that blends research, strategy, imagination and activation to unlock opportunity and deliver business performance.
Launched in October 2020, Yonder brings together the expertise of four specialist businesses: the award-winning research and consultancy of Populus, the brand and business strategy of BrandCap, and the insight-led innovation of Decidedly. The state-of-the-art data capture of Populus Data Solutions has rebranded to Yonder Data Solutions.
Yonder has a team of 175 researchers, data analysts, strategists, creatives, culture experts and innovators based in London, New York and Hong Kong.
Yonder’s clients include Amazon, BT, Costa Coffee, Formula 1, Lane Crawford, Marks & Spencer, Nationwide, Premier League, Oriental Bank, Rosewood Hotels and Toyota.
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