How sustainability and ESG went from a trend to mission critical

New EY survey highlights executive leader views on continued importance of sustainability and ESG practices

You could almost be forgiven of late for feeling that sustainability and ESG (environmental, social and governance) has lost a little of its appeal. Or that perhaps the fast-paced momentum of the trend has slowed for some leaders. The truth is, when any game-changing new business thinking arrives in the pervasive way sustainability and ESG has, that trend can often peak rapidly. But as we all set course for 2023 and beyond, it’s important to separate the mission-critical relevance of sustainability and ESG in modern business from the attention and corporate buzz it generated in 2022.

Ernst & Young LLP recently commissioned a survey on the business relevance of sustainability and ESG initiatives. Responses from the C-suite across a number of Fortune 1000 companies confirm what many of us suspected: ESG is still very much in the sights of American executives and at the top of every agenda. So, as you plot your own ESG agenda for the coming year, take a look at how peers are viewing this business imperative for the year ahead.

The C-Suite Insights: Sustainability & ESG Trends Index targeted more than 500 C-suite leaders and members of executive management at US organizations with revenues of $1.5 billion or more. Of all respondents, 91% held C-suite leadership positions.

C-Suite executives account for 91% of all survey respondents

  • Chart description

    An interactive pie chart representing an astonishing number of C-suite executives that answered our survey. The user can rollover any slice of the pie chart and view the percentage of which title each of the executives represented (e.g., CEO, CFO, etc.).

  • The survey: executives say yes to sustainability and ESG

    Our team asked questions related to one overarching issue: just how important is sustainability and ESG in business today? The overwhelming and definitive response: very. From our survey, every single respondent indicated sustainability and environmental, social and governance (ESG) issues are important to their organization, with 87% believing those initiatives are very to extremely important to their businesses and long-term success.

    • Chart descriptions

      1. A bar chart depicting seniority level of those completing the survey. The line bar chart shows 100% of those that completed the survey are in executive management roles (e.g., CEO, CFO, COO, Managing Director, Finance Manager, etc.).
      2. A bar chart depicting results for the question of “how important do you believe sustainability and environmental, social and governance (ESG) initiatives to be to your organization?” 49% of respondents indicated extremely important, 38% indicated very important, 10% indicated somewhat important, and 3% indicated slightly important.

  • Sustainability and ESG initiatives alive and well

    Integrating sustainability into the business model is now an imperative for every organization. ESG and sustainability priorities can deliver the transparency investors seek, the workplace cultures and practices that employees demand, and the focus on environmental issues that shape consumer behavior. In our survey executives agree, but where 2021 and much of 2022 may have been more about ESG strategy and program building, momentum on real and diverse sustainability and ESG initiatives is now fully under way for many organizations.

    Half of respondents highlighted company sustainability initiatives around the development and commercialization of sustainable products, or the development of more agile and sustainable supply chains for the future of their businesses: a critical success factor to mitigate ongoing and predicted disruptions. As many as 82% of surveyed leaders confirm their organizations have both carbon emissions reductions initiatives in place and goals to reach net zero by a given year. And more than two out of five executives also reported a focus on sustainability and ESG initiatives more related to social equity, a key concern for employees, customers and other stakeholders.

    • Chart descriptions

      1. A bar chart depicting percentage of executives’ organizations that have a public carbon reduction commitment. The line bar chart shows that 82% answered yes, and 18% answered no.
      2. A bar chart compares executives’ responses to the question of “what elements of sustainability and ESG initiatives, if any, is your organization working on? 50% indicated sustainable supply chains, 50% also indicated commercialization – developing sustainable products, 48% indicated ESG measurement and reporting, 47% reported carbon reduction ambitions/commitments and 41% indicated social equity.

  • Greater attention on workforce wellbeing

    In the reshaped American and global workplace, employee wellbeing and satisfaction is essential for effective day-to-day business as well as long-term growth. Beyond attracting talent in a tight labor market, many organizations are adopting sustainability and ESG initiatives to improve overall employee conditions, supporting health and productivity.

    In fact, 61% of leaders say addressing employee health and overall wellbeing is critical to the success of their organizations. Fifty-eight percent believe in addressing economic impact, including fair wages, and the vast majority (87%) of leaders support and report diversity in their workplace.

    • Chart descriptions

      1. A bar chart showing percentages to the question of “do you believe addressing any of the following are critical to the success of your organization?” 61% of respondents selected employee health and wellbeing. 58% of respondents selected economic impact (fair wages, economic development, etc.) 49% of respondents indicated diversity and inclusion. 43% of respondents selected human rights.
      2. A bar chart showing the percentage of respondents answering the question of “does your organization report the diversity composition of its workforce?” 87% indicated yes, while 13% answered no.

  • Reporting preparedness on the rise but work to be done

    Our recent EY Global Reporting and Institutional Investor Survey highlighted the continued importance of sustainability and ESG strategies and reporting to the investment community. As investors now demand greater transparency from public companies, the regulatory landscape evolves and the SEC proposal for climate-related disclosures for public companies makes reporting more stringent, more organizations are seeing ESG and sustainability as a way to demonstrate commitment and enhance reputation beyond simply financial performance.

    Almost half of leaders (48%) reported a greater priority for, and focus on, measurement protocols and reporting standards. If the proposal becomes finalized in the coming year, 84% of executives also say their organizations are prepared to act, leaving one in six leaders indicating their businesses are not prepared for enhanced reporting requirements, or at present, that remains to be determined.

    • Chart descriptions

      1. A bar graph compares executives’ responses to the question of “what elements of sustainability and ESG initiatives, if any, is your organization working on? 50% indicated sustainable supply chains, 50% also indicated commercialization – developing sustainable products, 48% indicated ESG measurement and reporting, 47% reported carbon reduction ambitions/commitments and 41% indicated social equity.
      2. A bar chart representing responses to the question of “is your organization prepared to act should the SEC proposal regarding climate-related disclosures for public companies in the United States be finalized?” 84% of executives indicated yes, while 15% answered no.

  • Leaders gearing up organizational structures for ESG initiatives

    Sustainability and ESG initiatives are becoming a central strategy to building long-term value. Organizations are both investing in the structural changes necessary to drive sustainability priorities and also becoming aware of the impact – both positive and negative – that sustainability and ESG performance can have on their businesses. Fifty-four percent of leaders now see environmental issues, and 52% view technology, as emerging sustainability and ESG risks as the landscape evolves and initiatives gain more visible momentum.

    To help focus management efforts, changes are afoot within organizational structures. Just a few short years ago the role of chief sustainability officers (CSOs) was far less widespread than in modern organizations. Today 81% of survey respondents say they have a CSO or equivalent position within their leadership hierarchy, focused on developing the sustainability strategies critical to achieving long-term business goals. Just over a third of those CSOs have a direct line of reporting to the CEO of their business, with 25% reporting into other executive leaders, demonstrating the commitment to, and integration of, ESG strategy at the very highest levels of organizations. Board involvement in ESG and sustainability matters has also gained momentum, with nine out of 10 executives reporting board oversight of their organizations’ sustainability and ESG agendas in an effort to track performance against goals and provide greater transparency for investors.

    Aside from internal structures, collaboration is also a key strategy for many. Between 86% and 91% of C-suite leaders report their organizations are greenlighting and boosting both industry and public-private ESG and sustainability collaborations. Expect this to continue into 2023 and beyond.

    • Chart descriptions

      1. A bar chart depicting the responses executives provided for the question “which of the following does your organization view as emerging sustainability and ESG risks?” 54% answered environmental, 52% responded technological, 45% answered economic, 40% answered geopolitical and 35% indicated societal.
      2. A bar chart showing the answer to the question of “does your organization have a Chief Sustainability Officer or equivalent executive with that responsibility? 81% answered yes, while 19% answered no.
      3. A bar chart depicting results to the question of “what part pf the organization does the Chief Sustainability Officer or equivalent roll into?” 31% answered reports to CEO, 25% indicated operations, 18% answered finance, 17% answered marketing, and 9% indicated legal.
      4. A bar chart depicting responses to the question of “does your board of directors have oversight to the organization’s sustainability and ESG agenda? 86% indicated yes, while 14% indicated no.
      5. A bar chart representing responses to the statement of “to what extent do you agree or disagree with the following statement: My organization is boosting collaboration efforts across industry and public-private ecosystems as it relates to sustainability and ESG priorities.” 47% of executives strongly agreed, 42% somewhat agreed, 10% neither agreed nor disagreed, and 1% somewhat disagreed.

At the EY organization, we believe sustainability is everyone’s business. While one survey cannot capture the full breadth of sustainability and ESG initiatives under way in the business landscape, corporate America is moving beyond seeing these simply as a trend. It is clear that sustainability and ESG will remain business imperatives for the year ahead.

C-suite Insights: Sustainability and ESG Trends Index

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Explore the Sustainability & ESG Trends Index

  • Chart description#Hide chart description

    The interactive circular graphic depicts industry, organization’s annual revenue, current job title, and a choice between traditional or contemporary C-suite. To the lower right of the circular, interactive graphic, there are two areas for dropdowns: 1) group by, and 2) shade by. This gives the users an opportunity to more closely examine and view the data they wish to view.

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