ESG knowledge among UK business leaders ‘patchy’: Marsh poll

The understanding and application of ESG among UK business leaders is patchy, with only around half understanding ESG and related requirements or incorporating ESG into business strategy, and less than half having an ESG governance structure/risk register, or reviewing supplier ESG strategy & credentials, according to Marsh’s UK Business Risk Report 2023. But the broker says UK business leaders are doing better than they think on ESG, with many unknowingly taking action in areas that directly contribute to ESG risk management. “This disparity between what leaders think they are doing to address ESG risks and what they are actually doing suggests that UK businesses need to think differently about ESG,” says Marsh. The report features data obtained from more than 2,100 UK businesses with turnover of between £100,000 and £500m+ per year. The report notes that just over half (55%) of respondents understand ESG requirements and half (50%) have incorporated ESG into business strategy. Even among those businesses for whom ESG reporting is mandatory, only 65% say they understand the requirements, despite the majority of this group having made ESG part of their strategy, the report says. It also finds that just 45% have an ESG governance structure/risk register, 48% review supplier ESG strategy & credentials, and only 37% have a Task Force on Climate-related Financial Disclosures plan Marsh states: “Based on those perceptions of ESG and ESG-related activity, it would be easy to conclude that businesses are simply not doing enough. However, many are unknowingly taking action in areas that directly contribute to ESG risk management.” For example, on the environmental side, over the last three years, almost three-quarters of respondents (70%) have undertaken property risk management, reducing the chance of a serious incident, which can also be a highly polluting event, while 72% have reviewed supplier contracts and relationships and 38% expect to improve carbon neutrality over the next 12 months, says Marsh. On the social side, Marsh says: “The attention businesses are paying to health and safety, employee wellbeing, and workplace culture all contribute to social performance, while 63% have reviewed their corporate social responsibility strategies over the last three years, which can help to ensure they have a positive impact on wider local communities.” And finally, on governance, over the last three years, 71% have reviewed business contingency plans, 73% have reviewed cyber security controls, 72% have checked their compliance with employment law, 73% have checked the suitability of insurance coverage, and 72% have reviewed leadership performance, the survey reveals. “Shifting their perspective on the many standalone actions businesses are taking to address risks would provide an excellent foundation for solid ESG performance,” says Marsh. “This would make it easier to identify and address gaps, as well as amplifying the benefits that flow from actions businesses are already taking.” It adds: “Those benefits could include better access to finance, better insurer perception of your ESG risks, improved employee satisfaction and retention, and an enhanced reputation among customers, suppliers, regulators, and the wider community. This is all crucial to business resilience and growth.”

ESG knowledge among UK business leaders ‘patchy’: Marsh poll

But many ‘unknowingly taking action’ that contributes to ESG risk management

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