Chief executives are side-lining ethical and green goals as they focus on shoring up their businesses ahead of a potential recession, according to a survey conducted by KPMG.
The survey of more than 1,300 chief executives across the globe found that around half of bosses are planning on “pausing or reconsidering” their environmental, social and corporate governance (ESG) efforts in the next six months and that more than a third have already done so.
The report also highlighted that most chief executives said ESG concerns were “important” and pointed to greater demand from staff and investors for increased reporting and transparency around the issues.
The survey also revealed that chief executives perceive stakeholders to be more attuned to greenwashing. 17% of respondents said stakeholder scepticism of ESG-related claims has increased this year, compared with 8% of those interviewed last year, making avoiding greenwashing a top concern among chief executives.
Risk of recession
Last month, the World Bank stated that the risk of a global recession being declared in 2023 had increased. Suggesting that the global core inflation rate (excluding energy) could rise to about 5% in 2023 – nearly double the five-year average before the pandemic. Out of those polled by KPMG, 86% agreed that a recession will occur within 12 months, with three-quarters anticipating disruption to their company’s growth for three years.
“Business leaders in the UK are predicting and preparing for an imminent recession,” said KPMG chief executive Jon Holt. “Many are having to make hard choices now to help their businesses weather the volatile conditions they face, with some telling us they are cutting back on important areas such as investing in their workforce and making their business more sustainable.”
ESG has grown from a fringe concern into a major force in recent years and finances carrying the ESG badge now control hundreds of billions of pounds.
Advocates say the ratings system has the potential to channel funding towards making the world a better place by limiting climate damage and establishing strong systems of control at companies. However, critics suggest ESG is often applied inconsistently and fails to reflect the complexity of the real world.
EY global vice chair of sustainability Steve Varley recently raised his concerns over ESG saying they were “definitely at a crossroads” amid concerns of greenwashing at some of the world’s largest funds.
KPMG’s global chairman and chief executive, Bill Thomas, concluded: “The events of recent years have created real turbulence for the business community. Our findings should provide some cautious optimism that, in contending with and overcoming these ordeals, executives are more confident in their companies’ resilience and are focused on mitigating some of the very real uncertainties we face today.”
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