EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
How EY can Help
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EY Long-term value teams can help you shape your strategy, drive transformation and measure progress in providing sustainable value through use of the WEF-IBC’s common metrics. EY leading role in developing the metrics means we’re uniquely placed to advise on their adoption and impact.
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Align with your employees
Another encouraging sign is that ESG (environment, social and corporate governance) is gaining traction, although it remains below traditional business issues in ranking. A third of leaders (except CIOs and CTOs) across roles rank it in their top five services. However, CIOs and CTOs deviated from the whole in valuing ESG and people issues far lower than their peers, an area that could pose a risk.
There is also a discrepancy between leadership and employees, with the full sample of alumni respondents ranking ESG higher than the C-suite group. Therefore, leadership needs to ensure they are in tune with the priorities and purpose of their employees. According to EY’s Future Consumer Index, 68% of consumers agree that companies need to drive positive social and environmental outcomes and ensure their suppliers meet high environmental and social standards.
In fact, according to EY’s work on The Embankment Project for Inclusive Capitalism, it is not uncommon that as little as 20% of a company’s value is captured on its balance sheet – a staggering decline from about 83% in 1975. This can result in differences in perspective between businesses and investors.
In order to highlight a commitment to ESG, companies will need to move beyond mere financial reporting and demonstrate how they are performing in terms of their employees, society and the environment and how they are fulfilling their consumers’ needs.
ESG is an area of growth for EY and a huge opportunity. We are making important strides in our understanding and commitment to sustainability and ensuring it is embedded both in our own organization and that of our clients.
To achieve long-term value, leadership needs to help ensure there are no blind spots and address the expectations of a broader range of stakeholders. In this environment, understanding stakeholders’ demands as well as delivering value for employees, customers, shareholders and the broader society will ultimately position your company to better adapt to changing market dynamics and drive greater financial value.