October 28, 2024
In recent years, environment, social and governance (ESG) criteria have evolved from a nice-to-have badge of honor to a necessary chore to an aspect of pivotal importance on every corporate agenda. But are companies genuinely walking the talk? And what can those who still lag behind learn from ESG leaders?
Based on six months' front-line research across multiple sectors globally, a new Roland Berger publication finds evidence that a far-reaching green transformation is in progress. However, the majority of companies still see significant room to improve their own ESG performance, with fewer than 10% laying claim to "ESG excellence." Nearly one quarter rate compliance with ESG regulations as the stiffest challenge to their organizations in the years ahead.
The study revealed that a key challenge lies in establishing effective ESG structures within organizations, which is essential for overcoming many of the unresolved issues.
Studying companies’ survey responses in detail, Roland Berger leveraged the six key dimensions of its Target Operating Model Framework to assess where considerable work is still needed. The structural integration of ESG matters within the organization was identified as a key area, alongside the ability to quantify and measure ESG performance. Supporting technologies, from reporting tools to AI, were also identified as crucial, as was the need to upskill the workforce and accumulate relevant knowledge. The leadership dimension speaks to the need for top management to buy into ESG commitments, setting an example and securing board-level backing. The report also stressed the need for ESG topics to become a regular feature of corporate culture, again on every level.
Deficiencies were found to exist in corporate practice in all of these areas. Accordingly, the Roland Berger publication focuses strongly on the principles and practices that set best-in-class ESG leaders apart from the rest. From strategic alignment and accountability to an understanding of ESG as a way to add value, five core principles consistently form the bedrock of leading players’ approaches to this crucial topic. Similarly, five best practices – relating to organizational structures, top management commitment, reporting lines, budget allocation and ESG training – are also singled out and explained in the report. In closing, the remarkable story of the steel producer serves as an eye-opening case study on how even heavy industry can embrace and advance the green transformation.
Download the full study to gain insights into the transformative impact of ESG considerations on businesses and the strategies adopted by companies to become leaders in ESG practices.
RB contact
Andreas Stocker, Senior Partner