RSM UK | THE REAL ECONOMY
SUSTAINABILITY
Q2 | 2024
Signs of positivity but proper guidance lacking
Sustainability continues to be at the forefront of businesses’ agendas, with middle market businesses displaying optimism regarding their commitment to achieving net-zero targets. Our survey shows that this commitment is driven by various factors, including meeting regulatory requirements, a desire to contribute positively to the environment and attracting/retaining customers. While this optimism is promising, it is tempered by the lack of availability and completeness of emissions-related data due to the varied maturity levels of participants across the value chain. Middle market businesses are eager to contribute to net-zero targets, but the path to achieving these goals is complex and multifaceted. This is particularly evident when dealing with Scope 3 and indirect supplier emissions, areas that require detailed information, effective management strategies and collaboration across complex value chains. The responsibility should not just sit with the company in question; it should be a collaborative effort involving all stakeholders.
of our survey respondents have a formal sustainability strategy in place, with a further 25% planning on creating one in the next 12 months.
of respondents have a net-zero target in place that is either already verified by the Science Based Targets initiative (SBTi) or is in the process of being verified.
Scope 1
Direct emissions from owned or controlled sources
Scope 2
Indirect emissions from the purchase of electricity, heating and cooling
Scope 3
All other sources of emissions that occur, including purchased goods and services, business travel, waste disposal, etc
Has your business collected data for Scope 1, Scope 2, and Scope 3 emissions?
Yes, we have collected data for scope 1
Yes, we have collected data for scope 2
Yes, we have collected data for scope 3
No
Not sure
Sustainability a growing opportunity for businesses
Middle market businesses are increasingly recognising the value of sustainability, with many of the businesses we asked seeing it as a distinct opportunity for growth. Yet, the perception of sustainability as an opportunity varies. Our research indicates that businesses have varying timelines for when they expect to see business value from their sustainability strategies, with some focused on long-term value creation, while others want to see short-term benefits. What’s more, businesses are showing a growing interest in promoting their green credentials and making sustainability a core part of their brand identity. However, it’s essential for companies to proceed with caution. As regulations around environmental claims become stricter, the danger of inadvertently greenwashing becomes a real concern.
of respondents feel sustainability provides an opportunity for their business.
of our respondents stated that they currently widely promote their green credentials to customers, suppliers and stakeholders, while 51% stated that they plan to do so in the next 12 months.
Do you believe that your sustainability strategy has created value for your business?
Yes, and it will continue to create value in the future
Yes, but only in the short term
No, but we believe it will in the future
No, and do not expect it to in the future
Not sure
Confusion around reporting persists
Companies are increasingly focusing on reporting their sustainability matters. Indeed, the OECD reported that in 2022, 86% of companies by market capitalisation disclosed sustainability-related information globally. But, so far, there’s not one framework that’s universally used to report on sustainability, making it difficult to compare between organisations and potentially leading to misinterpretations and skewed perceptions of a company’s true sustainability efforts. This absence of a universally used standard also complicates the process for companies as they attempt to identify the most relevant framework for their sustainability reporting. While work is underway in the sustainability community to consolidate existing standards into a few global and highly interoperable standards, these have not yet been adopted by most jurisdictions.
2.9
Many of the companies we asked used more than one framework, with an average of 2.9 per business.
of respondents provide external data on their sustainability plans and targets.
Which of the following frameworks, if any, is your business using to report data on sustainability?
Sustainability Accounting Standards Board (SASB)
United Nations Sustainable Development Goals
United Nations Global Compact
Carbon Disclosure Project (CDP)
Global Reporting Initiatives (GRI)
Climate Disclosure Standards Board (CDSB)
Embedding sustainability throughout your organisation
It’s more important than ever for businesses to treat sustainability as a holistic approach that permeates every aspect of their organisation rather than as a standalone concept. We’re seeing encouraging progress from the businesses we’ve surveyed, with many embedding their sustainability strategies within their main business strategy. However, the journey is far from over. To really make an impact, sustainability must be woven into the fabric of every business function. This can be achieved in several ways. For instance, businesses can tie senior leader compensation to specific sustainability performance metrics or they can assign responsibility for sustainability to senior leaders to elevate accountability within the organisation.
of the businesses who have a formal sustainability strategy in place have embedded these strategies within their main business strategies.
Who within your business, if anyone, is primarily responsible for managing your business's sustainability plan?
We have a dedicated sustainability executive at senior management level who is primarily responsible
Our board is jointly responsible for our sustainability plans
We have a dedicated sustainability executive at a lower level who is primarily responsible
One of our current management team is responsible for our sustainability plans
No one has overall responsibility for managing our sustainability plans
METHODOLOGY
The research was carried out by The Harris Poll for RSM. 414 senior executives from UK middle market businesses defined as companies with a turnover between £10m and £750m or financial institutions with assets under management of £200m to £7.5bn were surveyed for the research.
Data for this survey was collected between 2 April and 25 April 2024. Information was collected online or via telephone from 414 executives meeting the set criteria. All individuals qualified as executive level decision makers working across all regions and a broad range of industries. Responses have been weighted to ensure a true representation of the UK economy.
Chart percentages may not equal 100 per cent due to rounding.