A new report on the "S" of ESG finds that Innovators are helping clients confront the complexities of ESG in business, helping address risk while also supporting fundamental value creation and long-term business strategy
NEW YORK, July 11, 2024 /PRNewswire/ -- A new report from Law.com Compass Pacesetter Research (previously known as ALM Intelligence Pacesetter Research) has found that the "S" in ESG is a complex evolving terrain filled with differences in definition, measurement, and approaches but which is complicated by the additional layers of growing stakeholder pressure for accountability, rising stakeholder activism and regulations, the politicization of ESG, and differing regions perspectives, to name a few. While under pressure to incorporate ESG (S) principles into their business strategies, business leaders are confounded by unclear ESG definitions and goals, by insufficient data tracking, and by the sheer difficulty of achieving hard ROIs for ESG-related investments. An added wrinkle is that while most organizations are on some sort of ESG journey, their differing levels of ESG maturity make complying with ESG information requests at RFPs or vendor negotiations all the more difficult.
In response to this challenge, Innovators among professional services providers have approaches that span targeted business unit services all the way up to full-blown integrated, comprehensive, business strategy redesign. Innovators among professional service providers are driving conversations linking ESG to risk management and the optimization of business performance, optimal outcomes, and, ultimately, sustainable growth.
"At its core, the "S" is about people, and its subjective nature renders a one-size-fits-all approach ineffective, creating a need to develop customized frameworks that align with the organization's business strategy but also address the varied, and often conflicting, perspectives across stakeholders," said Ruth Sierra, Analyst, Law.com Compass Pacesetter Research.
Key trends identified in this research include:
-The increase in regulations in human rights, modern slavery, supply chain, Indigenous populations, and employment laws have caused many business leaders to begin addressing the "S" from a regulatory compliance perspective
-The "S" faces a number of challenges (e.g. lack of data, standardization in definition, measurement criteria, and reporting disclosure, diverse stakeholder perspectives, and differing regional perspectives on "S" issues, etc.), making ESG a cumbersome initiative for business leaders to invest in with an uncertain ROI, causing ESG to be seen as a cost, and of lesser priority, for some organizations
-With the "S" covering so many factors, both external and internal (e.g. diversity, equity, and inclusion (DE&I), employee engagement, community engagement, consumer protection, etc.), this has caused organizations and investors to each define and measure "S" factors differently creating a lack of cohesiveness in the data, driving skepticism of real business impact
-The lack of data available on ESG (social) issues has become the primary impediment to ESG initiatives, and Innovators among professional service providers are helping clients source and identify KPIs while collecting, structuring, normalizing, and centralizing social-related data to better position clients to manage long-term goals and realize the full business benefits
-Innovative professional service providers have moved beyond the one-size-fits-all approach and recognized effective "S" frameworks require a customized approach that aligns with the unique business goals of each client
-Increasingly AI is being used in areas such as DE&I to help reach diversity workforce goals through bias detection improvements, including identifying discrimination patterns in hiring to performance management, compensation, termination, etc.
In this three-part Law.com Compass Pacesetter Research series on ESG, our second report is on the "S": Social. The Pacesetter Advisory Council assessed dozens of providers to arrive at twenty Innovators recognized for their ability to help clients navigate an increasingly complex market environment. The research and analysis also provide insights into the competitive dynamics and service delivery trends driving convergence across legal, management consulting, multi-service, communication/PR, and recruitment firms.
In this report, Law.com Compass Pacesetter Research evaluates the innovation in ESG: Social capabilities and offerings of the following providers: APCO Worldwide, Baker McKenzie, Boston Consulting Group, Brunswick Group, Clifford Chance, Deloitte, DWF, EY, FTI Consulting, Insight Global, Korn Ferry, KPMG, Odgers Berndtson, Orrick, Herrington & Sutcliffe, Paul Weiss, PwC, Ropes & Gray, Russell Reynolds Associates, Teneo, WTW.
Law.com Compass Pacesetter Research provides independent, objective research to providers and buyers of professional services and practical insights that inform decision-making processes.
To learn more about the research or to obtain the full version of the ESG: Social 2024 report, go to: http://www.law.com/lawcom-compass/pacesetter-research.
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