More than six out of 10 mid-market businesses (62%) now believe that sustainability is just as important or more important than financial success, said Grant Thornton when releasing its latest International Business Report (IBR).
Environmental, social and governance (ESG) credentials are seen as a competitive advantage for much of the mid-market — reflecting the expectations of their client bases, the firm pointed out.
Among those businesses that are placing a greater emphasis on sustainability, the most common reason is to improve efficiencies and reduce costs (42%) which underscores the real commercial business benefits that they see in this area, according to the IBR.
However, a key challenge for many lies in understanding what to prioritise for maximum impact in the move to more sustainable business practices, particularly when limited resources are stretched thin due to the pandemic, the firm noted.
“Mid-market businesses are agile, adaptable, and many like to keep ahead of the curve, so sustainability makes sense to them,” said Trent Gazzaway, global leader services lines and capability at Grant Thornton International Ltd. “However, when it comes to reporting on certain aspects of sustainability such as carbon reduction, diversity and inclusion, their business models and adherence to regulatory requirements, many are finding it a challenge to understand what to prioritise.”
The top three obstacles indicated in the latest IBR data are:
- Busy dealing with issues linked to the pandemic (31%)
- Lack of clarity around new regulations/requirements (31%)
- Concerns about the costs related to taking action (30%)
While mid-market businesses’ natural ability to adapt will help, there is a clear role for government, regulators, and standard setters to provide support and establish clear pathways to best practice reporting on sustainability matters, Grant Thornton said.
The journey to a more sustainable future for businesses is not just about reporting, the firm advised.
While it is fundamental to the sustainability journey, it’s also important for businesses to create a long-term vision, goal and values structure that will help see them through this transition, the firm added.
“The willingness to take a long-term approach — even in the face of short-term difficulties — is a key pillar of sustainability, and it will serve businesses well in the future”, said Gazzaway.