Dive Brief:

• Despite the increasing push for companies to adopt environmental, social and corporate governance (ESG) goals, there remains a gap between companies’ stated ESG and sustainability plans and their ability to execute, a recent survey of CFOs, Chief Investment Officers (CIOs) and accountancy leaders found.
• One in five, or 19% of financial leaders do not currently consider any ESG information when making decisions and instead rely on traditional financial metrics, according to the survey.
• Another 29% reported that they are making efforts to include ESG data — but do not have the tools or techniques they need to fully incorporate the data into their decision-making.

Dive Insight:

A majority of the survey respondents agreed on the importance of sustainability, the survey found.

Ninety-three percent of financial leaders said that it is important to transform their financial decisions in a way that addresses ESG issues and 87% of survey respondents said ESG information is important for their decision-making, according to the survey.  

Yet ESG progress on the ground has been slow, the survey indicated, with 67% of respondents admitting they do not have access to the necessary tools to include ESG in their decision-making.  

Sixty-eight percent of financial leaders also pointed to the failure to adapt quickly to customer, employee, investor or regulatory demands for sustainability as the biggest ESG-related risk facing their firms, according to the survey. Failure to either mitigate or adapt to climate change was the second-highest ESG-related risk, and was indicated by 67% of financial leaders.

The gap between ESG’s purported importance and execution of sustainability practices is emerging as regulators such as the U.S. Securities and Exchange Commission (SEC) move forward with ESG data disclosure requirements.

The SEC’s proposed rule would require publicly-traded companies to include detailed disclosures on carbon emissions and climate risks. The rule is expected to be published before the end of the year, with the SEC reopening its comment file on the proposal earlier in October due to a technical glitch that may push back its finalization, according to a recent report by Bloomberg.

The rule, as well as sustainability practices overall have faced backlash in recent months, according to a recent CFO Dive report. Some critics — including both wary investors and state and federal Republican lawmakers — have labeled such practices “woke capitalism.” In spite of the pushback, already 92% of Standard & Poor’s 500 companies publish ESG reports, and it is unlikely they will walk back such commitments.

The survey was conduced by Accounting for Sustainability (A4S), a charitable organization established in 2004 by King Charles to promote sustainable business decision-making, as well as Deloitte and U.K.-based communication agency Black Sun.