Brand reputation a key driver for sustainability strategies, says Grant Thornton
Mid-market companies are adopting sustainability strategies to reinforce brand image and reputation, a Grant Thornton report has revealed.
Grant Thornton’s latest sustainability report has revealed brand reputation is one of the main driving factors in mid-market businesses adopting sustainability strategies.
The report, titled The journey to a sustainable future: Why the world needs a sustainable mid-market, explored the ESG and sustainability progress and actions of mid-market companies on a global scale.
Data from the report highlighted that 19 per cent of businesses globally and 16 per cent of Australian businesses said brand reputation was the main factor for enacting ESG and sustainability strategies.
The firm said this contrasted starkly with the predicted answer due to the recent legislation mandating climate-related disclosures passed by parliament earlier this year.
According to the results, only 7 per cent of businesses cited industry regulation as a factor and only 2 per cent cited government regulation as a factor, even with severe consequences if not applied.
Grant Thornton national managing partner ESG, Andrew Rigele, said sustainability standards were an increasingly important factor businesses would need to seriously consider.
“Meeting regulatory reporting and sustainability standards can be complex, and there are a number of aspects businesses need to consider when implementing an ESG and sustainability strategy, along with the sheer volume of data gathering that needs to be undertaken,” Rigele said.
“While it can be cumbersome, those that adapt by implementing a sustainability strategy that includes complying with regulations and standards will differentiate themselves in the marketplace, and experience better business outcomes.”
The data highlighted that most mid-market businesses had already taken their first steps in sustainability, Grant Thornton noted.
Forty-six per cent of Australian businesses already had or planned to introduce ESG and sustainability reporting within the next 12 months.
Forty-five per cent and 43 per cent of businesses said they were planning to implement net zero targets and sustainability strategies respectively over the next 12 months.
Sixteen per cent of mid-size businesses reported that the cost and complexity of regulations and standards were a significant barrier when adopting ESG and sustainability initiatives.
Ten per cent said the volume of regulations was a barrier, while 9 per cent pointed to a lack of skills and knowledge when developing ESG initiatives in the workplace.
International requirements were also viewed as a hurdle to international expansion due to differentiating international jurisdictions.
The firm said there was an opportunity in the mid-market as businesses were often more agile and flexible when reporting regulations faster than larger businesses.
However, 71 per cent of Australian mid-market businesses said ESG and sustainability requirements were a potential barrier to international business expansion.
Grant Thornton said it recommended that mid-market businesses implement ESG and sustainability initiatives sooner rather than later, as regulatory requirements and consumer demand would only increase and become more complex.
“Adopting sustainability practices will not only offer businesses a competitive advantage, increase attractiveness to investors and ensure the long-term health of their business but also protect brand reputation.”
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